Correlation Between Palantir Technologies and Kimberly Clark

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Can any of the company-specific risk be diversified away by investing in both Palantir Technologies and Kimberly Clark 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 Kimberly Clark into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Palantir Technologies and Kimberly Clark, you can compare the effects of market volatilities on Palantir Technologies and Kimberly Clark 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 Kimberly Clark. Check out your portfolio center. Please also check ongoing floating volatility patterns of Palantir Technologies and Kimberly Clark.

Diversification Opportunities for Palantir Technologies and Kimberly Clark

0.66
  Correlation Coefficient

Poor diversification

The 3 months correlation between Palantir and Kimberly is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Palantir Technologies and Kimberly Clark in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kimberly Clark 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 Kimberly Clark. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kimberly Clark has no effect on the direction of Palantir Technologies i.e., Palantir Technologies and Kimberly Clark go up and down completely randomly.

Pair Corralation between Palantir Technologies and Kimberly Clark

Assuming the 90 days trading horizon Palantir Technologies is expected to generate 2.97 times more return on investment than Kimberly Clark. However, Palantir Technologies is 2.97 times more volatile than Kimberly Clark. It trades about 0.23 of its potential returns per unit of risk. Kimberly Clark is currently generating about 0.02 per unit of risk. If you would invest  8,148  in Palantir Technologies on October 10, 2024 and sell it today you would earn a total of  5,952  from holding Palantir Technologies or generate 73.05% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

Palantir Technologies  vs.  Kimberly Clark

 Performance 
       Timeline  
Palantir Technologies 

Risk-Adjusted Performance

18 of 100

 
Weak
 
Strong
Solid
Compared to the overall equity markets, risk-adjusted returns on investments in Palantir Technologies are ranked lower than 18 (%) 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.
Kimberly Clark 

Risk-Adjusted Performance

1 of 100

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

Palantir Technologies and Kimberly Clark Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Palantir Technologies and Kimberly Clark

The main advantage of trading using opposite Palantir Technologies and Kimberly Clark positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Palantir Technologies position performs unexpectedly, Kimberly Clark 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 Kimberly Clark will offset losses from the drop in Kimberly Clark's long position.
The idea behind Palantir Technologies and Kimberly Clark 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 Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.

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