Correlation Between Palantir Technologies and BANNER

Can any of the company-specific risk be diversified away by investing in both Palantir Technologies and BANNER 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 BANNER into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Palantir Technologies and BANNER, you can compare the effects of market volatilities on Palantir Technologies and BANNER 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 BANNER. Check out your portfolio center. Please also check ongoing floating volatility patterns of Palantir Technologies and BANNER.

Diversification Opportunities for Palantir Technologies and BANNER

0.72

Correlation Coefficient

Palantir Technologies  BANNER

Poor diversification

The 3 months correlation between Palantir and BANNER is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Palantir Technologies and BANNER in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BANNER 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 are associated (or correlated) with BANNER. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BANNER has no effect on the direction of Palantir Technologies i.e., Palantir Technologies and BANNER go up and down completely randomly.

Pair Corralation between Palantir Technologies and BANNER

Assuming the 90 days horizon Palantir Technologies is expected to under-perform the BANNER. In addition to that, Palantir Technologies is 2.12 times more volatile than BANNER. It trades about -0.14 of its total potential returns per unit of risk. BANNER is currently generating about -0.15 per unit of volatility. If you would invest  6,750  in BANNER on October 15, 2024 and sell it today you would lose (300.00) from holding BANNER or give up 4.44% of portfolio value over 90 days.

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

Palantir Technologies  vs.  BANNER

Palantir Technologies

Risk-Adjusted Performance

16 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Palantir Technologies are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, Palantir Technologies reported solid returns over the last few months and may actually be approaching a breakup point.

BANNER

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in BANNER are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain technical and fundamental indicators, BANNER may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Palantir Technologies and BANNER

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

The idea behind Palantir Technologies and BANNER 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.