Correlation Between Palantir Technologies and Newlake Capital

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

Diversification Opportunities for Palantir Technologies and Newlake Capital

-0.31

Correlation Coefficient

Palantir Technologies  Newlake Capital

Very good diversification

The 3 months correlation between Palantir and Newlake is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Palantir Technologies Class and Newlake Capital Partners in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Newlake Capital Partners 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 Newlake Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Newlake Capital Partners has no effect on the direction of Palantir Technologies i.e., Palantir Technologies and Newlake Capital go up and down completely randomly.

Pair Corralation between Palantir Technologies and Newlake Capital

Given the investment horizon of 90 days Palantir Technologies Class is expected to under-perform the Newlake Capital. In addition to that, Palantir Technologies is 3.15 times more volatile than Newlake Capital Partners. It trades about -0.17 of its total potential returns per unit of risk. Newlake Capital Partners is currently generating about -0.51 per unit of volatility. If you would invest  1,788  in Newlake Capital Partners on October 23, 2024 and sell it today you would lose (170.00) from holding Newlake Capital Partners or give up 9.51% of portfolio value over 90 days.

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

Palantir Technologies Class  vs.  Newlake Capital Partners

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.

Newlake Capital Partners

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Newlake Capital Partners has generated negative risk-adjusted returns adding no value to investors with long positions. Even with fragile performance in the last few months, the Stock's fundamental indicators remain relatively invariable which may send shares a bit higher in February 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with Palantir Technologies and Newlake Capital

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

The idea behind Palantir Technologies Class and Newlake Capital Partners 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.