Correlation Between GXO Logistics and Radiant Logistics

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

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

Diversification Opportunities for GXO Logistics and Radiant Logistics

0.53

Correlation Coefficient

GXO Logistics  Radiant Logistics

Very weak diversification

The 3 months correlation between GXO and Radiant is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding GXO Logistics and Radiant Logistics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Radiant Logistics 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 Radiant Logistics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Radiant Logistics has no effect on the direction of GXO Logistics i.e., GXO Logistics and Radiant Logistics go up and down completely randomly.

Pair Corralation between GXO Logistics and Radiant Logistics

Considering the 90-day investment horizon GXO Logistics is expected to generate 3.97 times less return on investment than Radiant Logistics. In addition to that, GXO Logistics is 1.32 times more volatile than Radiant Logistics. It trades about 0.02 of its total potential returns per unit of risk. Radiant Logistics is currently generating about 0.08 per unit of volatility. If you would invest  641.00  in Radiant Logistics on September 12, 2024 and sell it today you would earn a total of  68.00  from holding Radiant Logistics or generate 10.61% return on investment over 90 days.

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

GXO Logistics  vs.  Radiant Logistics

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.

Radiant Logistics

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Radiant Logistics are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unfluctuating technical and fundamental indicators, Radiant Logistics may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with GXO Logistics and Radiant Logistics

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

The idea behind GXO Logistics and Radiant 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 Stocks Directory module to find actively traded stocks across global markets.