Correlation Between Planet Labs and Astronics

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

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

Diversification Opportunities for Planet Labs and Astronics

-0.83

Correlation Coefficient

Planet Labs  Astronics

Pay attention - limited upside

The 3 months correlation between Planet and Astronics is -0.83. Overlapping area represents the amount of risk that can be diversified away by holding Planet Labs PBC and Astronics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Astronics and Planet Labs 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 Planet Labs PBC are associated (or correlated) with Astronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Astronics has no effect on the direction of Planet Labs i.e., Planet Labs and Astronics go up and down completely randomly.

Pair Corralation between Planet Labs and Astronics

Allowing for the 90-day total investment horizon Planet Labs is expected to generate 2.11 times less return on investment than Astronics. In addition to that, Planet Labs is 1.21 times more volatile than Astronics. It trades about 0.02 of its total potential returns per unit of risk. Astronics is currently generating about 0.04 per unit of volatility. If you would invest  1,014  in Astronics on September 24, 2024 and sell it today you would earn a total of  577.00  from holding Astronics or generate 56.9% return on investment over 90 days.

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

Planet Labs PBC  vs.  Astronics

Planet Labs PBC

Risk-Adjusted Performance

21 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Planet Labs PBC are ranked lower than 21 (%) 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.

Astronics

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Astronics has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in January 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Planet Labs and Astronics

The main advantage of trading using opposite Planet Labs and Astronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Planet Labs position performs unexpectedly, Astronics 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 Astronics will offset losses from the drop in Astronics' long position.

The idea behind Planet Labs PBC and Astronics 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.