Correlation Between Planet Labs and Draganfly

Can any of the company-specific risk be diversified away by investing in both Planet Labs and Draganfly 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 Draganfly 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 Draganfly, you can compare the effects of market volatilities on Planet Labs and Draganfly 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 Draganfly. Check out your portfolio center. Please also check ongoing floating volatility patterns of Planet Labs and Draganfly.

Diversification Opportunities for Planet Labs and Draganfly

-0.26

Correlation Coefficient

Planet Labs  Draganfly

Very good diversification

The 3 months correlation between Planet and Draganfly is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding Planet Labs PBC and Draganfly in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Draganfly 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 Draganfly. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Draganfly has no effect on the direction of Planet Labs i.e., Planet Labs and Draganfly go up and down completely randomly.

Pair Corralation between Planet Labs and Draganfly

Allowing for the 90-day total investment horizon Planet Labs PBC is expected to generate 0.99 times more return on investment than Draganfly. However, Planet Labs PBC is 1.01 times less risky than Draganfly. It trades about -0.26 of its potential returns per unit of risk. Draganfly is currently generating about -0.31 per unit of risk. If you would invest  610.00  in Planet Labs PBC on December 2, 2024 and sell it today you would lose (148.00) from holding Planet Labs PBC or give up 24.26% of portfolio value over 90 days.

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

Planet Labs PBC  vs.  Draganfly

Planet Labs PBC

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Planet Labs PBC are ranked lower than 2 (%) 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.

Draganfly

Risk-Adjusted Performance

Very Weak

Over the last 90 days Draganfly 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 April 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Planet Labs and Draganfly

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

The idea behind Planet Labs PBC and Draganfly 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.