Correlation Between Planet Labs and Textron
Can any of the company-specific risk be diversified away by investing in both Planet Labs and Textron 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 Textron 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 Textron, you can compare the effects of market volatilities on Planet Labs and Textron 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 Textron. Check out your portfolio center. Please also check ongoing floating volatility patterns of Planet Labs and Textron.
Diversification Opportunities for Planet Labs and Textron
-0.44 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Planet and Textron is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding Planet Labs PBC and Textron in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Textron 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 Textron. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Textron has no effect on the direction of Planet Labs i.e., Planet Labs and Textron go up and down completely randomly.
Pair Corralation between Planet Labs and Textron
Allowing for the 90-day total investment horizon Planet Labs PBC is expected to generate 5.02 times more return on investment than Textron. However, Planet Labs is 5.02 times more volatile than Textron. It trades about 0.33 of its potential returns per unit of risk. Textron is currently generating about 0.04 per unit of risk. If you would invest 397.00 in Planet Labs PBC on November 3, 2024 and sell it today you would earn a total of 213.00 from holding Planet Labs PBC or generate 53.65% 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. Textron
Performance |
| Timeline |
| Planet Labs PBC |
| Textron |
Planet Labs and Textron Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Planet Labs and Textron
The main advantage of trading using opposite Planet Labs and Textron positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Planet Labs position performs unexpectedly, Textron 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 Textron will offset losses from the drop in Textron's long position.| Planet Labs vs. Virgin Galactic Holdings | Planet Labs vs. Eve Holding | Planet Labs vs. Redwire Corp | Planet Labs vs. Momentus |
| Textron vs. Hexcel | Textron vs. Huntington Ingalls Industries | Textron vs. Curtiss Wright | Textron vs. Mercury Systems |
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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