Correlation Between L3Harris Technologies and Planet Labs
Can any of the company-specific risk be diversified away by investing in both L3Harris Technologies 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 L3Harris Technologies and Planet Labs into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between L3Harris Technologies and Planet Labs PBC, you can compare the effects of market volatilities on L3Harris Technologies 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 L3Harris Technologies with a short position of Planet Labs. Check out your portfolio center. Please also check ongoing floating volatility patterns of L3Harris Technologies and Planet Labs.
Diversification Opportunities for L3Harris Technologies and Planet Labs
-0.68 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between L3Harris and Planet is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding L3Harris Technologies 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 L3Harris 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 L3Harris Technologies 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 L3Harris Technologies i.e., L3Harris Technologies and Planet Labs go up and down completely randomly.
Pair Corralation between L3Harris Technologies and Planet Labs
Considering the 90-day investment horizon L3Harris Technologies is expected to under-perform the Planet Labs. But the stock apears to be less risky and, when comparing its historical volatility, L3Harris Technologies is 3.98 times less risky than Planet Labs. The stock trades about -0.01 of its potential returns per unit of risk. The Planet Labs PBC is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 251.00 in Planet Labs PBC on November 21, 2024 and sell it today you would earn a total of 355.00 from holding Planet Labs PBC or generate 141.43% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
L3Harris Technologies vs. Planet Labs PBC
Performance |
Timeline |
L3Harris Technologies |
Planet Labs PBC |
L3Harris Technologies and Planet Labs Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with L3Harris Technologies and Planet Labs
The main advantage of trading using opposite L3Harris Technologies and Planet Labs positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if L3Harris Technologies 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.L3Harris Technologies vs. Lockheed Martin | ||
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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 Transaction History module to view history of all your transactions and understand their impact on performance.
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