Correlation Between Planet Labs and Redwire Corp
Can any of the company-specific risk be diversified away by investing in both Planet Labs and Redwire 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 Redwire 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 Redwire Corp, you can compare the effects of market volatilities on Planet Labs and Redwire 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 Redwire Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Planet Labs and Redwire Corp.
Diversification Opportunities for Planet Labs and Redwire Corp
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Planet and Redwire is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Planet Labs PBC and Redwire Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Redwire 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 Redwire Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Redwire Corp has no effect on the direction of Planet Labs i.e., Planet Labs and Redwire Corp go up and down completely randomly.
Pair Corralation between Planet Labs and Redwire Corp
Allowing for the 90-day total investment horizon Planet Labs is expected to generate 2.35 times less return on investment than Redwire Corp. In addition to that, Planet Labs is 1.0 times more volatile than Redwire Corp. It trades about 0.08 of its total potential returns per unit of risk. Redwire Corp is currently generating about 0.18 per unit of volatility. If you would invest 323.00 in Redwire Corp on August 27, 2024 and sell it today you would earn a total of 994.00 from holding Redwire Corp or generate 307.74% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Planet Labs PBC vs. Redwire Corp
Performance |
| Timeline |
| Planet Labs PBC |
| Redwire Corp |
Planet Labs and Redwire Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Planet Labs and Redwire Corp
The main advantage of trading using opposite Planet Labs and Redwire Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Planet Labs position performs unexpectedly, Redwire 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 Redwire Corp will offset losses from the drop in Redwire Corp's long position.| Planet Labs vs. The Boeing | Planet Labs vs. Curtiss Wright | Planet Labs vs. Ehang Holdings | Planet Labs vs. General Dynamics |
| Redwire Corp vs. Sidus Space | Redwire Corp vs. Planet Labs PBC | Redwire Corp vs. Intuitive Machines | Redwire Corp vs. Rocket Lab USA |
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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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