Correlation Between Palantir Technologies and Engie SA

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

Diversification Opportunities for Palantir Technologies and Engie SA

0.03

Correlation Coefficient

Palantir Technologies  Engie SA

Significant diversification

The 3 months correlation between Palantir and Engie is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Palantir Technologies Class and Engie SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Engie SA 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 Engie SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Engie SA has no effect on the direction of Palantir Technologies i.e., Palantir Technologies and Engie SA go up and down completely randomly.

Pair Corralation between Palantir Technologies and Engie SA

Given the investment horizon of 90 days Palantir Technologies is expected to generate 1.03 times less return on investment than Engie SA. In addition to that, Palantir Technologies is 1.21 times more volatile than Engie SA. It trades about 0.07 of its total potential returns per unit of risk. Engie SA is currently generating about 0.09 per unit of volatility. If you would invest  1,558  in Engie SA on December 29, 2024 and sell it today you would earn a total of  333.00  from holding Engie SA or generate 21.37% return on investment over 90 days.

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

Palantir Technologies Class  vs.  Engie SA

Palantir Technologies

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Palantir Technologies Class are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Even with relatively unsteady basic indicators, Palantir Technologies reported solid returns over the last few months and may actually be approaching a breakup point.

Engie SA

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Engie SA are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady basic indicators, Engie SA reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Palantir Technologies and Engie SA

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

The idea behind Palantir Technologies Class and Engie SA 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.