Correlation Between Planet Labs and Cadre Holdings
Can any of the company-specific risk be diversified away by investing in both Planet Labs and Cadre Holdings 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 Cadre Holdings 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 Cadre Holdings, you can compare the effects of market volatilities on Planet Labs and Cadre Holdings 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 Cadre Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Planet Labs and Cadre Holdings.
Diversification Opportunities for Planet Labs and Cadre Holdings
-0.56 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Planet and Cadre is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding Planet Labs PBC and Cadre Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cadre Holdings 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 Cadre Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cadre Holdings has no effect on the direction of Planet Labs i.e., Planet Labs and Cadre Holdings go up and down completely randomly.
Pair Corralation between Planet Labs and Cadre Holdings
Allowing for the 90-day total investment horizon Planet Labs PBC is expected to generate 2.09 times more return on investment than Cadre Holdings. However, Planet Labs is 2.09 times more volatile than Cadre Holdings. It trades about 0.05 of its potential returns per unit of risk. Cadre Holdings is currently generating about 0.02 per unit of risk. If you would invest 253.00 in Planet Labs PBC on August 27, 2024 and sell it today you would earn a total of 98.00 from holding Planet Labs PBC or generate 38.74% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Planet Labs PBC vs. Cadre Holdings
Performance |
| Timeline |
| Planet Labs PBC |
| Cadre Holdings |
Planet Labs and Cadre Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Planet Labs and Cadre Holdings
The main advantage of trading using opposite Planet Labs and Cadre Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Planet Labs position performs unexpectedly, Cadre Holdings 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 Cadre Holdings will offset losses from the drop in Cadre Holdings' long position.| Planet Labs vs. The Boeing | Planet Labs vs. Curtiss Wright | Planet Labs vs. Ehang Holdings | Planet Labs vs. General Dynamics |
| Cadre Holdings vs. The Boeing | Cadre Holdings vs. Curtiss Wright | Cadre Holdings vs. Ehang Holdings | Cadre Holdings 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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