Correlation Between Archer Aviation and Planet Labs

Can any of the company-specific risk be diversified away by investing in both Archer Aviation 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 Archer Aviation and Planet Labs into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Archer Aviation and Planet Labs PBC, you can compare the effects of market volatilities on Archer Aviation 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 Archer Aviation with a short position of Planet Labs. Check out your portfolio center. Please also check ongoing floating volatility patterns of Archer Aviation and Planet Labs.

Diversification Opportunities for Archer Aviation and Planet Labs

0.95

Correlation Coefficient

Archer Aviation  Planet Labs

Almost no diversification

The 3 months correlation between Archer and Planet is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding Archer Aviation 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 Archer Aviation 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 Archer Aviation 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 Archer Aviation i.e., Archer Aviation and Planet Labs go up and down completely randomly.

Pair Corralation between Archer Aviation and Planet Labs

Given the investment horizon of 90 days Archer Aviation is expected to generate 2.0 times more return on investment than Planet Labs. However, Archer Aviation is 2.0 times more volatile than Planet Labs PBC. It trades about 0.26 of its potential returns per unit of risk. Planet Labs PBC is currently generating about 0.36 per unit of risk. If you would invest  451.00  in Archer Aviation on September 12, 2024 and sell it today you would earn a total of  288.00  from holding Archer Aviation or generate 63.86% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	100.0%
Values	Daily Returns

Archer Aviation  vs.  Planet Labs PBC

Archer Aviation

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Archer Aviation are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Even with relatively conflicting technical indicators, Archer Aviation reported solid returns over the last few months and may actually be approaching a breakup point.

Planet Labs PBC

Risk-Adjusted Performance

22 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Planet Labs PBC are ranked lower than 22 (%) of all global equities and portfolios over the last 90 days. Despite quite weak essential indicators, Planet Labs disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Archer Aviation and Planet Labs

The main advantage of trading using opposite Archer Aviation and Planet Labs positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Archer Aviation 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.

The idea behind Archer Aviation and Planet Labs PBC pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.