Correlation Between Palantir Technologies and ASML Holding

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

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

Diversification Opportunities for Palantir Technologies and ASML Holding

-0.02

Correlation Coefficient

Palantir Technologies  ASML Holding

Good diversification

The 3 months correlation between Palantir and ASML is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding Palantir Technologies Class and ASML Holding NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ASML Holding NV 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 Class are associated (or correlated) with ASML Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ASML Holding NV has no effect on the direction of Palantir Technologies i.e., Palantir Technologies and ASML Holding go up and down completely randomly.

Pair Corralation between Palantir Technologies and ASML Holding

Given the investment horizon of 90 days Palantir Technologies Class is expected to under-perform the ASML Holding. In addition to that, Palantir Technologies is 2.06 times more volatile than ASML Holding NV. It trades about -0.03 of its total potential returns per unit of risk. ASML Holding NV is currently generating about 0.19 per unit of volatility. If you would invest  71,228  in ASML Holding NV on October 20, 2024 and sell it today you would earn a total of  4,772  from holding ASML Holding NV or generate 6.7% return on investment over 90 days.

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

Palantir Technologies Class  vs.  ASML Holding NV

Palantir Technologies

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Palantir Technologies Class are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Even with relatively abnormal basic indicators, Palantir Technologies reported solid returns over the last few months and may actually be approaching a breakup point.

ASML Holding NV

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in ASML Holding NV are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak essential indicators, ASML Holding may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Palantir Technologies and ASML Holding

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

The idea behind Palantir Technologies Class and ASML Holding NV 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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.