Correlation Between Palantir Technologies and VMware

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

Diversification Opportunities for Palantir Technologies and VMware

0.0

Correlation Coefficient

Palantir Technologies  VMware

Pay attention - limited upside

The 3 months correlation between Palantir and VMware is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Palantir Technologies Class and VMware Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VMware Inc 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 VMware. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VMware Inc has no effect on the direction of Palantir Technologies i.e., Palantir Technologies and VMware go up and down completely randomly.

Pair Corralation between Palantir Technologies and VMware

If you would invest  6,708  in Palantir Technologies Class on November 28, 2024 and sell it today you would earn a total of  2,076  from holding Palantir Technologies Class or generate 30.95% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Palantir Technologies Class  vs.  VMware Inc

Palantir Technologies

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Palantir Technologies Class are ranked lower than 8 (%) 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.

VMware Inc

Risk-Adjusted Performance

Very Weak

Over the last 90 days VMware Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable primary indicators, VMware is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Palantir Technologies and VMware

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

The idea behind Palantir Technologies Class and VMware Inc 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.