Correlation Between Palantir Technologies and Otis Worldwide
Can any of the company-specific risk be diversified away by investing in both Palantir Technologies and Otis Worldwide 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 Otis Worldwide into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Palantir Technologies and Otis Worldwide, you can compare the effects of market volatilities on Palantir Technologies and Otis Worldwide 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 Otis Worldwide. Check out your portfolio center. Please also check ongoing floating volatility patterns of Palantir Technologies and Otis Worldwide.
Diversification Opportunities for Palantir Technologies and Otis Worldwide
0.57 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Palantir and Otis is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Palantir Technologies and Otis Worldwide in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Otis Worldwide 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 Otis Worldwide. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Otis Worldwide has no effect on the direction of Palantir Technologies i.e., Palantir Technologies and Otis Worldwide go up and down completely randomly.
Pair Corralation between Palantir Technologies and Otis Worldwide
Assuming the 90 days trading horizon Palantir Technologies is expected to generate 2.95 times more return on investment than Otis Worldwide. However, Palantir Technologies is 2.95 times more volatile than Otis Worldwide. It trades about 0.38 of its potential returns per unit of risk. Otis Worldwide is currently generating about 0.08 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 10,012 from holding Palantir Technologies or generate 148.99% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 95.31% |
Values | Daily Returns |
Palantir Technologies vs. Otis Worldwide
Performance |
Timeline |
Palantir Technologies |
Otis Worldwide |
Palantir Technologies and Otis Worldwide Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Palantir Technologies and Otis Worldwide
The main advantage of trading using opposite Palantir Technologies and Otis Worldwide positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Palantir Technologies position performs unexpectedly, Otis Worldwide 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 Otis Worldwide will offset losses from the drop in Otis Worldwide's long position.Palantir Technologies vs. Recrusul SA | Palantir Technologies vs. Apple Inc | Palantir Technologies vs. Amazon Inc | Palantir Technologies vs. A1VY34 |
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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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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