Correlation Between Palantir Technologies and GP Investments

Can any of the company-specific risk be diversified away by investing in both Palantir Technologies and GP Investments 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 Palantir Technologies and GP Investments into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Palantir Technologies and GP Investments, you can compare the effects of market volatilities on Palantir Technologies and GP Investments 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 Palantir Technologies with a short position of GP Investments. Check out your portfolio center. Please also check ongoing floating volatility patterns of Palantir Technologies and GP Investments.

Diversification Opportunities for Palantir Technologies and GP Investments

-0.28

Correlation Coefficient

Palantir Technologies  GP Investments

Very good diversification

The 3 months correlation between Palantir and GPIV33 is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding Palantir Technologies and GP Investments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GP Investments and Palantir Technologies 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 Palantir Technologies are associated (or correlated) with GP Investments. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GP Investments has no effect on the direction of Palantir Technologies i.e., Palantir Technologies and GP Investments go up and down completely randomly.

Pair Corralation between Palantir Technologies and GP Investments

Assuming the 90 days trading horizon Palantir Technologies is expected to generate 1.44 times more return on investment than GP Investments. However, Palantir Technologies is 1.44 times more volatile than GP Investments. It trades about 0.14 of its potential returns per unit of risk. GP Investments is currently generating about 0.04 per unit of risk. If you would invest  1,183  in Palantir Technologies on October 7, 2024 and sell it today you would earn a total of  15,333  from holding Palantir Technologies or generate 1296.11% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.8%
Values	Daily Returns

Palantir Technologies  vs.  GP Investments

Palantir Technologies

Risk-Adjusted Performance

27 of 100

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Palantir Technologies are ranked lower than 27 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak essential indicators, Palantir Technologies sustained solid returns over the last few months and may actually be approaching a breakup point.

GP Investments

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in GP Investments are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong forward indicators, GP Investments is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Palantir Technologies and GP Investments

The main advantage of trading using opposite Palantir Technologies and GP Investments positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Palantir Technologies position performs unexpectedly, GP Investments 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 GP Investments will offset losses from the drop in GP Investments' long position.

The idea behind Palantir Technologies and GP Investments 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.