Correlation Between Planet Labs and Hexcel

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

Diversification Opportunities for Planet Labs and Hexcel

0.56

Correlation Coefficient

Planet Labs  Hexcel

Very weak diversification

The 3 months correlation between Planet and Hexcel is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Planet Labs PBC and Hexcel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hexcel 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 Hexcel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hexcel has no effect on the direction of Planet Labs i.e., Planet Labs and Hexcel go up and down completely randomly.

Pair Corralation between Planet Labs and Hexcel

Allowing for the 90-day total investment horizon Planet Labs PBC is expected to generate 2.41 times more return on investment than Hexcel. However, Planet Labs is 2.41 times more volatile than Hexcel. It trades about 0.02 of its potential returns per unit of risk. Hexcel is currently generating about 0.01 per unit of risk. If you would invest  454.00  in Planet Labs PBC on September 25, 2024 and sell it today you would lose (50.00) from holding Planet Labs PBC or give up 11.01% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	99.8%
Values	Daily Returns

Planet Labs PBC  vs.  Hexcel

Planet Labs PBC

Risk-Adjusted Performance

20 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Planet Labs PBC are ranked lower than 20 (%) 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.

Hexcel

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Hexcel are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent basic indicators, Hexcel is not utilizing all of its potentials. The recent stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Planet Labs and Hexcel

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

The idea behind Planet Labs PBC and Hexcel 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.