Correlation Between Globavend Holdings and GXO Logistics

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

By analyzing existing cross correlation between Globavend Holdings Limited and GXO Logistics, you can compare the effects of market volatilities on Globavend Holdings and GXO Logistics 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 Globavend Holdings with a short position of GXO Logistics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Globavend Holdings and GXO Logistics.

Diversification Opportunities for Globavend Holdings and GXO Logistics

0.05

Correlation Coefficient

Globavend Holdings  GXO Logistics

Significant diversification

The 3 months correlation between Globavend and GXO is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Globavend Holdings Limited and GXO Logistics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GXO Logistics and Globavend Holdings 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 Globavend Holdings Limited are associated (or correlated) with GXO Logistics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GXO Logistics has no effect on the direction of Globavend Holdings i.e., Globavend Holdings and GXO Logistics go up and down completely randomly.

Pair Corralation between Globavend Holdings and GXO Logistics

Considering the 90-day investment horizon Globavend Holdings is expected to generate 18.76 times less return on investment than GXO Logistics. In addition to that, Globavend Holdings is 2.06 times more volatile than GXO Logistics. It trades about 0.0 of its total potential returns per unit of risk. GXO Logistics is currently generating about 0.14 per unit of volatility. If you would invest  4,766  in GXO Logistics on September 5, 2024 and sell it today you would earn a total of  1,134  from holding GXO Logistics or generate 23.79% return on investment over 90 days.

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

Globavend Holdings Limited  vs.  GXO Logistics

Globavend Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Globavend Holdings Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong basic indicators, Globavend Holdings is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

GXO Logistics

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in GXO Logistics are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of very unsteady basic indicators, GXO Logistics displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Globavend Holdings and GXO Logistics

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

The idea behind Globavend Holdings Limited and GXO Logistics 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.