Correlation Between Palantir Technologies and Loyalty Ventures

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

Diversification Opportunities for Palantir Technologies and Loyalty Ventures

-0.91

Correlation Coefficient

Palantir Technologies  Loyalty Ventures

Pay attention - limited upside

The 3 months correlation between Palantir and Loyalty is -0.91. Overlapping area represents the amount of risk that can be diversified away by holding Palantir Technologies Class and Loyalty Ventures in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Loyalty Ventures 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 Loyalty Ventures. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Loyalty Ventures has no effect on the direction of Palantir Technologies i.e., Palantir Technologies and Loyalty Ventures go up and down completely randomly.

Pair Corralation between Palantir Technologies and Loyalty Ventures

Given the investment horizon of 90 days Palantir Technologies Class is expected to generate 0.16 times more return on investment than Loyalty Ventures. However, Palantir Technologies Class is 6.36 times less risky than Loyalty Ventures. It trades about 0.14 of its potential returns per unit of risk. Loyalty Ventures is currently generating about -0.15 per unit of risk. If you would invest  650.00  in Palantir Technologies Class on September 30, 2024 and sell it today you would earn a total of  7,258  from holding Palantir Technologies Class or generate 1116.62% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	14.08%
Values	Daily Returns

Palantir Technologies Class  vs.  Loyalty Ventures

Palantir Technologies

Risk-Adjusted Performance

22 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Palantir Technologies Class are ranked lower than 22 (%) 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.

Loyalty Ventures

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Loyalty Ventures has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable essential indicators, Loyalty Ventures is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Palantir Technologies and Loyalty Ventures

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

The idea behind Palantir Technologies Class and Loyalty Ventures 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 Commodity Directory module to find actively traded commodities issued by global exchanges.