Correlation Between Redwire Corp and Planet Labs
Can any of the company-specific risk be diversified away by investing in both Redwire Corp 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 Redwire Corp and Planet Labs into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Redwire Corp and Planet Labs PBC, you can compare the effects of market volatilities on Redwire Corp 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 Redwire Corp with a short position of Planet Labs. Check out your portfolio center. Please also check ongoing floating volatility patterns of Redwire Corp and Planet Labs.
Diversification Opportunities for Redwire Corp and Planet Labs
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Redwire and Planet is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Redwire Corp 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 Redwire Corp 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 Redwire Corp 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 Redwire Corp i.e., Redwire Corp and Planet Labs go up and down completely randomly.
Pair Corralation between Redwire Corp and Planet Labs
Considering the 90-day investment horizon Redwire Corp is expected to generate 1.12 times less return on investment than Planet Labs. In addition to that, Redwire Corp is 1.35 times more volatile than Planet Labs PBC. It trades about 0.35 of its total potential returns per unit of risk. Planet Labs PBC is currently generating about 0.53 per unit of volatility. If you would invest 236.00 in Planet Labs PBC on August 28, 2024 and sell it today you would earn a total of 142.00 from holding Planet Labs PBC or generate 60.17% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Redwire Corp vs. Planet Labs PBC
Performance |
| Timeline |
| Redwire Corp |
| Planet Labs PBC |
Redwire Corp and Planet Labs Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Redwire Corp and Planet Labs
The main advantage of trading using opposite Redwire Corp and Planet Labs positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Redwire Corp 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.| Redwire Corp vs. Sidus Space | Redwire Corp vs. Planet Labs PBC | Redwire Corp vs. Intuitive Machines | Redwire Corp vs. Rocket Lab USA |
| Planet Labs vs. The Boeing | Planet Labs vs. Curtiss Wright | Planet Labs vs. Ehang Holdings | Planet Labs 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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