Correlation Between Palantir Technologies and Griffon

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Can any of the company-specific risk be diversified away by investing in both Palantir Technologies and Griffon 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 Griffon into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Palantir Technologies and Griffon 575, you can compare the effects of market volatilities on Palantir Technologies and Griffon 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 Griffon. Check out your portfolio center. Please also check ongoing floating volatility patterns of Palantir Technologies and Griffon.

Diversification Opportunities for Palantir Technologies and Griffon

-0.23
  Correlation Coefficient

Very good diversification

The 3 months correlation between Palantir and Griffon is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding Palantir Technologies and Griffon 575 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Griffon 575 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 Griffon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Griffon 575 has no effect on the direction of Palantir Technologies i.e., Palantir Technologies and Griffon go up and down completely randomly.

Pair Corralation between Palantir Technologies and Griffon

Given the investment horizon of 90 days Palantir Technologies is expected to generate 5.84 times more return on investment than Griffon. However, Palantir Technologies is 5.84 times more volatile than Griffon 575. It trades about 0.29 of its potential returns per unit of risk. Griffon 575 is currently generating about -0.09 per unit of risk. If you would invest  4,243  in Palantir Technologies on August 16, 2024 and sell it today you would earn a total of  1,675  from holding Palantir Technologies or generate 39.48% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Palantir Technologies  vs.  Griffon 575

 Performance 
       Timeline  
Palantir Technologies 

Risk-Adjusted Performance

21 of 100

 
Weak
 
Strong
Solid
Compared to the overall equity markets, risk-adjusted returns on investments in Palantir Technologies are ranked lower than 21 (%) of all global equities and portfolios over the last 90 days. Even with relatively abnormal basic indicators, Palantir Technologies reported solid returns over the last few months and may actually be approaching a breakup point.
Griffon 575 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Griffon 575 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Griffon is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Palantir Technologies and Griffon Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Palantir Technologies and Griffon

The main advantage of trading using opposite Palantir Technologies and Griffon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Palantir Technologies position performs unexpectedly, Griffon 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 Griffon will offset losses from the drop in Griffon's long position.
The idea behind Palantir Technologies and Griffon 575 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.

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