Correlation Between Planet Labs and Intuitive Machines

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

Diversification Opportunities for Planet Labs and Intuitive Machines

0.63

Correlation Coefficient

Planet Labs  Intuitive Machines

Poor diversification

The 3 months correlation between Planet and Intuitive is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Planet Labs PBC and Intuitive Machines in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Intuitive Machines 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 Intuitive Machines. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Intuitive Machines has no effect on the direction of Planet Labs i.e., Planet Labs and Intuitive Machines go up and down completely randomly.

Pair Corralation between Planet Labs and Intuitive Machines

Allowing for the 90-day total investment horizon Planet Labs PBC is expected to generate 0.84 times more return on investment than Intuitive Machines. However, Planet Labs PBC is 1.2 times less risky than Intuitive Machines. It trades about 0.06 of its potential returns per unit of risk. Intuitive Machines is currently generating about 0.02 per unit of risk. If you would invest  393.00  in Planet Labs PBC on November 28, 2024 and sell it today you would earn a total of  46.00  from holding Planet Labs PBC or generate 11.7% return on investment over 90 days.

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

Planet Labs PBC  vs.  Intuitive Machines

Planet Labs PBC

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Planet Labs PBC are ranked lower than 4 (%) 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.

Intuitive Machines

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Intuitive Machines are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Even with relatively abnormal basic indicators, Intuitive Machines may actually be approaching a critical reversion point that can send shares even higher in March 2025.

Pair Trading with Planet Labs and Intuitive Machines

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

The idea behind Planet Labs PBC and Intuitive Machines 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.