Correlation Between GXO Logistics and Open Lending

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

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

Diversification Opportunities for GXO Logistics and Open Lending

0.19

Correlation Coefficient

GXO Logistics  Open Lending

Average diversification

The 3 months correlation between GXO and Open is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding GXO Logistics and Open Lending Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Open Lending Corp and GXO Logistics 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 GXO Logistics are associated (or correlated) with Open Lending. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Open Lending Corp has no effect on the direction of GXO Logistics i.e., GXO Logistics and Open Lending go up and down completely randomly.

Pair Corralation between GXO Logistics and Open Lending

Considering the 90-day investment horizon GXO Logistics is expected to generate 4.83 times less return on investment than Open Lending. But when comparing it to its historical volatility, GXO Logistics is 1.07 times less risky than Open Lending. It trades about 0.02 of its potential returns per unit of risk. Open Lending Corp is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  549.00  in Open Lending Corp on September 12, 2024 and sell it today you would earn a total of  63.00  from holding Open Lending Corp or generate 11.48% return on investment over 90 days.

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

GXO Logistics  vs.  Open Lending Corp

GXO Logistics

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in GXO Logistics are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, GXO Logistics is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Open Lending Corp

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Open Lending Corp are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of very abnormal basic indicators, Open Lending displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with GXO Logistics and Open Lending

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

The idea behind GXO Logistics and Open Lending Corp 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 Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.