Correlation Between Palantir Technologies and Confluent

Can any of the company-specific risk be diversified away by investing in both Palantir Technologies and Confluent 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 Confluent 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 Confluent, you can compare the effects of market volatilities on Palantir Technologies and Confluent 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 Confluent. Check out your portfolio center. Please also check ongoing floating volatility patterns of Palantir Technologies and Confluent.

Diversification Opportunities for Palantir Technologies and Confluent

0.96

Correlation Coefficient

Palantir Technologies  Confluent

Almost no diversification

The 3 months correlation between Palantir and Confluent is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding Palantir Technologies Class and Confluent in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Confluent 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 Confluent. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Confluent has no effect on the direction of Palantir Technologies i.e., Palantir Technologies and Confluent go up and down completely randomly.

Pair Corralation between Palantir Technologies and Confluent

Given the investment horizon of 90 days Palantir Technologies Class is expected to generate 0.98 times more return on investment than Confluent. However, Palantir Technologies Class is 1.02 times less risky than Confluent. It trades about 0.27 of its potential returns per unit of risk. Confluent is currently generating about 0.04 per unit of risk. If you would invest  6,298  in Palantir Technologies Class on September 20, 2024 and sell it today you would earn a total of  1,226  from holding Palantir Technologies Class or generate 19.46% return on investment over 90 days.

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

Palantir Technologies Class  vs.  Confluent

Palantir Technologies

Risk-Adjusted Performance

21 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Palantir Technologies Class are ranked lower than 21 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Palantir Technologies reported solid returns over the last few months and may actually be approaching a breakup point.

Confluent

Risk-Adjusted Performance

13 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Confluent are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unfluctuating essential indicators, Confluent unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Palantir Technologies and Confluent

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

The idea behind Palantir Technologies Class and Confluent 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.