Correlation Between Palantir Technologies and Monster Beverage

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

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

Diversification Opportunities for Palantir Technologies and Monster Beverage

0.75

Correlation Coefficient

Palantir Technologies  Monster Beverage

Poor diversification

The 3 months correlation between Palantir and Monster is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Palantir Technologies and Monster Beverage in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Monster Beverage 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 Monster Beverage. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Monster Beverage has no effect on the direction of Palantir Technologies i.e., Palantir Technologies and Monster Beverage go up and down completely randomly.

Pair Corralation between Palantir Technologies and Monster Beverage

Assuming the 90 days trading horizon Palantir Technologies is expected to generate 2.02 times more return on investment than Monster Beverage. However, Palantir Technologies is 2.02 times more volatile than Monster Beverage. It trades about 0.35 of its potential returns per unit of risk. Monster Beverage is currently generating about 0.09 per unit of risk. If you would invest  10,495  in Palantir Technologies on October 7, 2024 and sell it today you would earn a total of  6,021  from holding Palantir Technologies or generate 57.37% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Palantir Technologies  vs.  Monster Beverage

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.

Monster Beverage

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Monster Beverage are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Monster Beverage sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Palantir Technologies and Monster Beverage

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

The idea behind Palantir Technologies and Monster Beverage 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.

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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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.