Correlation Between Planet Labs and Triumph

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

Diversification Opportunities for Planet Labs and Triumph

0.24

Correlation Coefficient

Planet Labs  Triumph

Modest diversification

The 3 months correlation between Planet and Triumph is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Planet Labs PBC and Triumph Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Triumph Group 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 Triumph. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Triumph Group has no effect on the direction of Planet Labs i.e., Planet Labs and Triumph go up and down completely randomly.

Pair Corralation between Planet Labs and Triumph

Allowing for the 90-day total investment horizon Planet Labs PBC is expected to under-perform the Triumph. In addition to that, Planet Labs is 1.37 times more volatile than Triumph Group. It trades about -0.01 of its total potential returns per unit of risk. Triumph Group is currently generating about 0.13 per unit of volatility. If you would invest  1,865  in Triumph Group on December 28, 2024 and sell it today you would earn a total of  681.00  from holding Triumph Group or generate 36.51% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.36%
Values	Daily Returns

Planet Labs PBC  vs.  Triumph Group

Planet Labs PBC

Risk-Adjusted Performance

Very Weak

Over the last 90 days Planet Labs PBC has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent essential indicators, Planet Labs is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Triumph Group

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Triumph Group are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite fairly weak technical and fundamental indicators, Triumph demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Planet Labs and Triumph

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

The idea behind Planet Labs PBC and Triumph Group 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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.