Correlation Between Rocket Lab and Planet Labs
Can any of the company-specific risk be diversified away by investing in both Rocket Lab 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 Rocket Lab and Planet Labs into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Rocket Lab USA and Planet Labs PBC, you can compare the effects of market volatilities on Rocket Lab 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 Rocket Lab with a short position of Planet Labs. Check out your portfolio center. Please also check ongoing floating volatility patterns of Rocket Lab and Planet Labs.
Diversification Opportunities for Rocket Lab and Planet Labs
0.92 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Rocket and Planet is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Rocket Lab USA 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 Rocket Lab 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 Rocket Lab USA 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 Rocket Lab i.e., Rocket Lab and Planet Labs go up and down completely randomly.
Pair Corralation between Rocket Lab and Planet Labs
Given the investment horizon of 90 days Rocket Lab is expected to generate 1.26 times less return on investment than Planet Labs. In addition to that, Rocket Lab is 1.18 times more volatile than Planet Labs PBC. It trades about 0.09 of its total potential returns per unit of risk. Planet Labs PBC is currently generating about 0.13 per unit of volatility. If you would invest 451.00 in Planet Labs PBC on November 2, 2024 and sell it today you would earn a total of 131.00 from holding Planet Labs PBC or generate 29.05% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Rocket Lab USA vs. Planet Labs PBC
Performance |
| Timeline |
| Rocket Lab USA |
| Planet Labs PBC |
Rocket Lab and Planet Labs Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Rocket Lab and Planet Labs
The main advantage of trading using opposite Rocket Lab and Planet Labs positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Rocket Lab 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.| Rocket Lab vs. Redwire Corp | Rocket Lab vs. Momentus | Rocket Lab vs. Planet Labs PBC | Rocket Lab vs. Virgin Galactic Holdings |
| Planet Labs vs. Virgin Galactic Holdings | Planet Labs vs. Eve Holding | Planet Labs vs. Redwire Corp | Planet Labs vs. Momentus |
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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
Other Complementary Tools
| Content Syndication Quickly integrate customizable finance content to your own investment portal | |
| Competition Analyzer Analyze and compare many basic indicators for a group of related or unrelated entities | |
| Watchlist Optimization Optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm | |
| Portfolio Comparator Compare the composition, asset allocations and performance of any two portfolios in your account | |
| Global Correlations Find global opportunities by holding instruments from different markets |