Correlation Between General Dynamics and Planet Labs
Can any of the company-specific risk be diversified away by investing in both General Dynamics and Planet Labs 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 General Dynamics and Planet Labs into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Dynamics and Planet Labs PBC, you can compare the effects of market volatilities on General Dynamics and Planet Labs 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 General Dynamics with a short position of Planet Labs. Check out your portfolio center. Please also check ongoing floating volatility patterns of General Dynamics and Planet Labs.
Diversification Opportunities for General Dynamics and Planet Labs
-0.49 | Correlation Coefficient |
Very good diversification
The 3 months correlation between General and Planet is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding General Dynamics and Planet Labs PBC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Planet Labs PBC and General Dynamics 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 General Dynamics are associated (or correlated) with Planet Labs. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Planet Labs PBC has no effect on the direction of General Dynamics i.e., General Dynamics and Planet Labs go up and down completely randomly.
Pair Corralation between General Dynamics and Planet Labs
Allowing for the 90-day total investment horizon General Dynamics is expected to under-perform the Planet Labs. But the stock apears to be less risky and, when comparing its historical volatility, General Dynamics is 2.07 times less risky than Planet Labs. The stock trades about -0.15 of its potential returns per unit of risk. The Planet Labs PBC is currently generating about 0.48 of returns per unit of risk over similar time horizon. If you would invest 230.00 in Planet Labs PBC on August 26, 2024 and sell it today you would earn a total of 121.00 from holding Planet Labs PBC or generate 52.61% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
General Dynamics vs. Planet Labs PBC
Performance |
| Timeline |
| General Dynamics |
| Planet Labs PBC |
General Dynamics and Planet Labs Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with General Dynamics and Planet Labs
The main advantage of trading using opposite General Dynamics and Planet Labs positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if General Dynamics position performs unexpectedly, Planet Labs 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 Planet Labs will offset losses from the drop in Planet Labs' long position.| General Dynamics vs. Lockheed Martin | General Dynamics vs. Raytheon Technologies Corp | General Dynamics vs. L3Harris Technologies | General Dynamics vs. Huntington Ingalls Industries |
| Planet Labs vs. The Boeing | Planet Labs vs. Curtiss Wright | Planet Labs vs. Ehang Holdings | Planet Labs vs. General Dynamics |
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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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