Correlation Between Royal Caribbean and Palantir Technologies
Can any of the company-specific risk be diversified away by investing in both Royal Caribbean and Palantir Technologies 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 Royal Caribbean and Palantir Technologies into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Royal Caribbean Cruises and Palantir Technologies, you can compare the effects of market volatilities on Royal Caribbean and Palantir Technologies 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 Royal Caribbean with a short position of Palantir Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Royal Caribbean and Palantir Technologies.
Diversification Opportunities for Royal Caribbean and Palantir Technologies
0.96 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Royal and Palantir is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding Royal Caribbean Cruises and Palantir Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Palantir Technologies and Royal Caribbean 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 Royal Caribbean Cruises are associated (or correlated) with Palantir Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Palantir Technologies has no effect on the direction of Royal Caribbean i.e., Royal Caribbean and Palantir Technologies go up and down completely randomly.
Pair Corralation between Royal Caribbean and Palantir Technologies
Assuming the 90 days trading horizon Royal Caribbean is expected to generate 5.74 times less return on investment than Palantir Technologies. But when comparing it to its historical volatility, Royal Caribbean Cruises is 1.75 times less risky than Palantir Technologies. It trades about 0.11 of its potential returns per unit of risk. Palantir Technologies is currently generating about 0.38 of returns per unit of risk over similar time horizon. If you would invest 12,450 in Palantir Technologies on September 24, 2024 and sell it today you would earn a total of 3,719 from holding Palantir Technologies or generate 29.87% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Strong |
Accuracy | 100.0% |
Values | Daily Returns |
Royal Caribbean Cruises vs. Palantir Technologies
Performance |
Timeline |
Royal Caribbean Cruises |
Palantir Technologies |
Royal Caribbean and Palantir Technologies Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Royal Caribbean and Palantir Technologies
The main advantage of trading using opposite Royal Caribbean and Palantir Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Royal Caribbean position performs unexpectedly, Palantir Technologies 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 Palantir Technologies will offset losses from the drop in Palantir Technologies' long position.Royal Caribbean vs. Booking Holdings | Royal Caribbean vs. Expedia Group | Royal Caribbean vs. Carnival plc | Royal Caribbean vs. Norwegian Cruise Line |
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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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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