Correlation Between Palantir Technologies and Raytheon Technologies

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

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

Diversification Opportunities for Palantir Technologies and Raytheon Technologies

0.09

Correlation Coefficient

Palantir Technologies  Raytheon Technologies

Significant diversification

The 3 months correlation between Palantir and Raytheon is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding Palantir Technologies and Raytheon Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Raytheon Technologies 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 Raytheon Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Raytheon Technologies has no effect on the direction of Palantir Technologies i.e., Palantir Technologies and Raytheon Technologies go up and down completely randomly.

Pair Corralation between Palantir Technologies and Raytheon Technologies

Assuming the 90 days trading horizon Palantir Technologies is expected to generate 3.67 times more return on investment than Raytheon Technologies. However, Palantir Technologies is 3.67 times more volatile than Raytheon Technologies. It trades about 0.04 of its potential returns per unit of risk. Raytheon Technologies is currently generating about 0.09 per unit of risk. If you would invest  16,703  in Palantir Technologies on December 27, 2024 and sell it today you would earn a total of  716.00  from holding Palantir Technologies or generate 4.29% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.33%
Values	Daily Returns

Palantir Technologies  vs.  Raytheon Technologies

Palantir Technologies

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Palantir Technologies are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain essential indicators, Palantir Technologies sustained solid returns over the last few months and may actually be approaching a breakup point.

Raytheon Technologies

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Raytheon Technologies are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Raytheon Technologies may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Palantir Technologies and Raytheon Technologies

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

The idea behind Palantir Technologies and Raytheon 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.

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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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.