Correlation Between Planet Labs and AAR Corp
Can any of the company-specific risk be diversified away by investing in both Planet Labs and AAR Corp 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 Planet Labs and AAR Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Planet Labs PBC and AAR Corp, you can compare the effects of market volatilities on Planet Labs and AAR Corp 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 Planet Labs with a short position of AAR Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Planet Labs and AAR Corp.
Diversification Opportunities for Planet Labs and AAR Corp
0.49 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Planet and AAR is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Planet Labs PBC and AAR Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AAR Corp and Planet Labs 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 Planet Labs PBC are associated (or correlated) with AAR Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AAR Corp has no effect on the direction of Planet Labs i.e., Planet Labs and AAR Corp go up and down completely randomly.
Pair Corralation between Planet Labs and AAR Corp
Allowing for the 90-day total investment horizon Planet Labs PBC is expected to generate 2.12 times more return on investment than AAR Corp. However, Planet Labs is 2.12 times more volatile than AAR Corp. It trades about 0.03 of its potential returns per unit of risk. AAR Corp is currently generating about 0.04 per unit of risk. If you would invest 341.00 in Planet Labs PBC on September 1, 2024 and sell it today you would earn a total of 52.00 from holding Planet Labs PBC or generate 15.25% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Planet Labs PBC vs. AAR Corp
Performance |
| Timeline |
| Planet Labs PBC |
| AAR Corp |
Planet Labs and AAR Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Planet Labs and AAR Corp
The main advantage of trading using opposite Planet Labs and AAR Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Planet Labs position performs unexpectedly, AAR Corp 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 AAR Corp will offset losses from the drop in AAR Corp's long position.| Planet Labs vs. Virgin Galactic Holdings | Planet Labs vs. Eve Holding | Planet Labs vs. Redwire Corp | Planet Labs vs. Momentus |
| AAR Corp vs. Archer Aviation | AAR Corp vs. Ehang Holdings | AAR Corp vs. Rocket Lab USA | AAR Corp vs. Lilium NV |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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