Correlation Between Curtiss Wright and Planet Labs

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

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

Diversification Opportunities for Curtiss Wright and Planet Labs

0.05

Correlation Coefficient

Curtiss Wright  Planet Labs

Significant diversification

The 3 months correlation between Curtiss and Planet is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Curtiss Wright 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 Curtiss Wright 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 Curtiss Wright 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 Curtiss Wright i.e., Curtiss Wright and Planet Labs go up and down completely randomly.

Pair Corralation between Curtiss Wright and Planet Labs

Allowing for the 90-day total investment horizon Curtiss Wright is expected to under-perform the Planet Labs. But the stock apears to be less risky and, when comparing its historical volatility, Curtiss Wright is 2.68 times less risky than Planet Labs. The stock trades about -0.04 of its potential returns per unit of risk. The Planet Labs PBC is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  414.00  in Planet Labs PBC on December 24, 2024 and sell it today you would lose (14.00) from holding Planet Labs PBC or give up 3.38% of portfolio value over 90 days.

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

Curtiss Wright  vs.  Planet Labs PBC

Curtiss Wright

Risk-Adjusted Performance

Very Weak

Over the last 90 days Curtiss Wright has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Curtiss Wright is not utilizing all of its potentials. The current stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Planet Labs PBC

Risk-Adjusted Performance

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Planet Labs PBC are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite quite weak essential indicators, Planet Labs may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Curtiss Wright and Planet Labs

The main advantage of trading using opposite Curtiss Wright and Planet Labs positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Curtiss Wright 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 Curtiss Wright 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.