Correlation Between Stronghold Digital and Palantir TechnologiesInc

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

By analyzing existing cross correlation between Stronghold Digital Mining and Palantir TechnologiesInc, you can compare the effects of market volatilities on Stronghold Digital and Palantir TechnologiesInc 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 Stronghold Digital with a short position of Palantir TechnologiesInc. Check out your portfolio center. Please also check ongoing floating volatility patterns of Stronghold Digital and Palantir TechnologiesInc.

Diversification Opportunities for Stronghold Digital and Palantir TechnologiesInc

-0.17

Correlation Coefficient

Stronghold Digital  Palantir TechnologiesInc

Good diversification

The 3 months correlation between Stronghold and Palantir is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding Stronghold Digital Mining and Palantir TechnologiesInc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Palantir TechnologiesInc and Stronghold Digital 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 Stronghold Digital Mining are associated (or correlated) with Palantir TechnologiesInc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Palantir TechnologiesInc has no effect on the direction of Stronghold Digital i.e., Stronghold Digital and Palantir TechnologiesInc go up and down completely randomly.

Pair Corralation between Stronghold Digital and Palantir TechnologiesInc

Given the investment horizon of 90 days Stronghold Digital Mining is expected to under-perform the Palantir TechnologiesInc. In addition to that, Stronghold Digital is 4.3 times more volatile than Palantir TechnologiesInc. It trades about -0.23 of its total potential returns per unit of risk. Palantir TechnologiesInc is currently generating about -0.38 per unit of volatility. If you would invest  2,457  in Palantir TechnologiesInc on January 20, 2024 and sell it today you would lose (344.00) from holding Palantir TechnologiesInc or give up 14.0% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.45%
Values	Daily Returns

Stronghold Digital Mining  vs.  Palantir TechnologiesInc

Stronghold Digital Mining

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Stronghold Digital Mining 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 forward indicators remain nearly stable which may send shares a bit higher in May 2024. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Palantir TechnologiesInc

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Palantir TechnologiesInc are ranked lower than 6 (%) 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.

Pair Trading with Stronghold Digital and Palantir TechnologiesInc

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

The idea behind Stronghold Digital Mining and Palantir TechnologiesInc 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.

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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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.