Correlation Between North American and Palantir Technologies

Specify exactly 2 symbols:
Can any of the company-specific risk be diversified away by investing in both North American and Palantir Technologies at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining North American and Palantir Technologies into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between North American Construction and Palantir Technologies, you can compare the effects of market volatilities on North American and Palantir Technologies and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in North American with a short position of Palantir Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of North American and Palantir Technologies.

Diversification Opportunities for North American and Palantir Technologies

NorthPalantirDiversified AwayNorthPalantirDiversified Away100%
0.85
  Correlation Coefficient

Very poor diversification

The 3 months correlation between North and Palantir is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding North American Construction and Palantir Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Palantir Technologies and North American is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on North American Construction are associated (or correlated) with Palantir Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Palantir Technologies has no effect on the direction of North American i.e., North American and Palantir Technologies go up and down completely randomly.

Pair Corralation between North American and Palantir Technologies

Assuming the 90 days horizon North American is expected to generate 3.1 times less return on investment than Palantir Technologies. But when comparing it to its historical volatility, North American Construction is 1.56 times less risky than Palantir Technologies. It trades about 0.13 of its potential returns per unit of risk. Palantir Technologies is currently generating about 0.27 of returns per unit of risk over similar time horizon. If you would invest  3,827  in Palantir Technologies on October 31, 2024 and sell it today you would earn a total of  3,877  from holding Palantir Technologies or generate 101.31% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthStrong
Accuracy98.33%
ValuesDaily Returns

North American Construction  vs.  Palantir Technologies

 Performance 
JavaScript chart by amCharts 3.21.15NovDec2025 020406080
JavaScript chart by amCharts 3.21.15N5Z PTX
       Timeline  
North American Const 

Risk-Adjusted Performance

10 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in North American Construction are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, North American reported solid returns over the last few months and may actually be approaching a breakup point.
JavaScript chart by amCharts 3.21.15NovDecJanDecJan15161718192021
Palantir Technologies 

Risk-Adjusted Performance

20 of 100

 
Weak
 
Strong
Solid
Compared to the overall equity markets, risk-adjusted returns on investments in Palantir Technologies are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, Palantir Technologies reported solid returns over the last few months and may actually be approaching a breakup point.
JavaScript chart by amCharts 3.21.15NovDecJanDecJan404550556065707580

North American and Palantir Technologies Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-9.19-6.88-4.58-2.270.02.44.847.289.72 0.0150.0200.0250.0300.0350.0400.045
JavaScript chart by amCharts 3.21.15N5Z PTX
       Returns  

Pair Trading with North American and Palantir Technologies

The main advantage of trading using opposite North American and Palantir Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if North American position performs unexpectedly, Palantir Technologies can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Palantir Technologies will offset losses from the drop in Palantir Technologies' long position.
The idea behind North American Construction and Palantir Technologies pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
Check out your portfolio center.
Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.

Other Complementary Tools

Financial Widgets
Easily integrated Macroaxis content with over 30 different plug-and-play financial widgets
Commodity Directory
Find actively traded commodities issued by global exchanges
AI Portfolio Architect
Use AI to generate optimal portfolios and find profitable investment opportunities
Idea Breakdown
Analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes
Idea Analyzer
Analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas


 

Discover investing ideas

Utilize additional investing modules