Correlation Between Palantir TechnologiesInc and FTAI Infrastructure

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Can any of the company-specific risk be diversified away by investing in both Palantir TechnologiesInc and FTAI Infrastructure 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 TechnologiesInc and FTAI Infrastructure into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Palantir TechnologiesInc and FTAI Infrastructure, you can compare the effects of market volatilities on Palantir TechnologiesInc and FTAI Infrastructure 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 TechnologiesInc with a short position of FTAI Infrastructure. Check out your portfolio center. Please also check ongoing floating volatility patterns of Palantir TechnologiesInc and FTAI Infrastructure.

Diversification Opportunities for Palantir TechnologiesInc and FTAI Infrastructure

0.7
  Correlation Coefficient

Poor diversification

The 3 months correlation between Palantir and FTAI is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Palantir TechnologiesInc and FTAI Infrastructure in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FTAI Infrastructure and Palantir TechnologiesInc 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 TechnologiesInc are associated (or correlated) with FTAI Infrastructure. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FTAI Infrastructure has no effect on the direction of Palantir TechnologiesInc i.e., Palantir TechnologiesInc and FTAI Infrastructure go up and down completely randomly.

Pair Corralation between Palantir TechnologiesInc and FTAI Infrastructure

Given the investment horizon of 90 days Palantir TechnologiesInc is expected to under-perform the FTAI Infrastructure. But the stock apears to be less risky and, when comparing its historical volatility, Palantir TechnologiesInc is 1.01 times less risky than FTAI Infrastructure. The stock trades about -0.07 of its potential returns per unit of risk. The FTAI Infrastructure is currently generating about 0.54 of returns per unit of risk over similar time horizon. If you would invest  432.00  in FTAI Infrastructure on December 30, 2023 and sell it today you would earn a total of  196.00  from holding FTAI Infrastructure or generate 45.37% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

Palantir TechnologiesInc  vs.  FTAI Infrastructure

 Performance 
       Timeline  
Palantir TechnologiesInc 

Risk-Adjusted Performance

10 of 100

 
Low
 
High
OK
Compared to the overall equity markets, risk-adjusted returns on investments in Palantir TechnologiesInc are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Palantir TechnologiesInc reported solid returns over the last few months and may actually be approaching a breakup point.
FTAI Infrastructure 

Risk-Adjusted Performance

20 of 100

 
Low
 
High
Solid
Compared to the overall equity markets, risk-adjusted returns on investments in FTAI Infrastructure are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak forward indicators, FTAI Infrastructure reported solid returns over the last few months and may actually be approaching a breakup point.

Palantir TechnologiesInc and FTAI Infrastructure Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Palantir TechnologiesInc and FTAI Infrastructure

The main advantage of trading using opposite Palantir TechnologiesInc and FTAI Infrastructure positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Palantir TechnologiesInc position performs unexpectedly, FTAI Infrastructure 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 FTAI Infrastructure will offset losses from the drop in FTAI Infrastructure's long position.
The idea behind Palantir TechnologiesInc and FTAI Infrastructure 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.

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