Correlation Between Palantir Technologies and PACIFIC

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

Diversification Opportunities for Palantir Technologies and PACIFIC

-0.25

Correlation Coefficient

Palantir Technologies  PACIFIC

Very good diversification

The 3 months correlation between Palantir and PACIFIC is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding Palantir Technologies Class and PACIFIC GAS ELECTRIC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PACIFIC GAS ELECTRIC 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 PACIFIC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PACIFIC GAS ELECTRIC has no effect on the direction of Palantir Technologies i.e., Palantir Technologies and PACIFIC go up and down completely randomly.

Pair Corralation between Palantir Technologies and PACIFIC

Given the investment horizon of 90 days Palantir Technologies Class is expected to generate 6.39 times more return on investment than PACIFIC. However, Palantir Technologies is 6.39 times more volatile than PACIFIC GAS ELECTRIC. It trades about 0.21 of its potential returns per unit of risk. PACIFIC GAS ELECTRIC is currently generating about -0.04 per unit of risk. If you would invest  4,259  in Palantir Technologies Class on October 23, 2024 and sell it today you would earn a total of  2,918  from holding Palantir Technologies Class or generate 68.51% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.33%
Values	Daily Returns

Palantir Technologies Class  vs.  PACIFIC GAS ELECTRIC

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.

PACIFIC GAS ELECTRIC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days PACIFIC GAS ELECTRIC has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, PACIFIC is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Palantir Technologies and PACIFIC

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

The idea behind Palantir Technologies Class and PACIFIC GAS ELECTRIC 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.