Correlation Between Palantir Technologies and Moderna

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

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

Diversification Opportunities for Palantir Technologies and Moderna

-0.88

Correlation Coefficient

Palantir Technologies  Moderna

Pay attention - limited upside

The 3 months correlation between Palantir and Moderna is -0.88. Overlapping area represents the amount of risk that can be diversified away by holding Palantir Technologies and Moderna in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Moderna 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 Moderna. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Moderna has no effect on the direction of Palantir Technologies i.e., Palantir Technologies and Moderna go up and down completely randomly.

Pair Corralation between Palantir Technologies and Moderna

Assuming the 90 days trading horizon Palantir Technologies is expected to generate 1.13 times more return on investment than Moderna. However, Palantir Technologies is 1.13 times more volatile than Moderna. It trades about 0.37 of its potential returns per unit of risk. Moderna is currently generating about -0.15 per unit of risk. If you would invest  6,720  in Palantir Technologies on September 24, 2024 and sell it today you would earn a total of  9,449  from holding Palantir Technologies or generate 140.61% return on investment over 90 days.

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

Palantir Technologies  vs.  Moderna

Palantir Technologies

Risk-Adjusted Performance

28 of 100

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Palantir Technologies are ranked lower than 28 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain essential indicators, Palantir Technologies sustained solid returns over the last few months and may actually be approaching a breakup point.

Moderna

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Moderna has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Palantir Technologies and Moderna

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

The idea behind Palantir Technologies and Moderna 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.