Correlation Between Boeing and Planet Labs

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

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

Diversification Opportunities for Boeing and Planet Labs

0.59

Correlation Coefficient

Boeing  Planet Labs

Very weak diversification

The 3 months correlation between Boeing and Planet is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Boeing Co 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 Boeing 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 Boeing Co 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 Boeing i.e., Boeing and Planet Labs go up and down completely randomly.

Pair Corralation between Boeing and Planet Labs

Assuming the 90 days horizon Boeing Co is expected to generate 0.31 times more return on investment than Planet Labs. However, Boeing Co is 3.22 times less risky than Planet Labs. It trades about 0.01 of its potential returns per unit of risk. Planet Labs PBC is currently generating about -0.01 per unit of risk. If you would invest  6,193  in Boeing Co on December 25, 2024 and sell it today you would lose (4.00) from holding Boeing Co or give up 0.06% of portfolio value over 90 days.

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

Boeing Co  vs.  Planet Labs PBC

Boeing

Risk-Adjusted Performance

Very Weak

Over the last 90 days Boeing Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Boeing is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Planet Labs PBC

Risk-Adjusted Performance

Very Weak

Over the last 90 days Planet Labs PBC has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent essential indicators, Planet Labs is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Boeing and Planet Labs

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

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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.