Correlation Between GXO Logistics and Clear Secure

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

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

Diversification Opportunities for GXO Logistics and Clear Secure

0.2

Correlation Coefficient

GXO Logistics  Clear Secure

Modest diversification

The 3 months correlation between GXO and Clear is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding GXO Logistics and Clear Secure in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Clear Secure 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 Clear Secure. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Clear Secure has no effect on the direction of GXO Logistics i.e., GXO Logistics and Clear Secure go up and down completely randomly.

Pair Corralation between GXO Logistics and Clear Secure

Considering the 90-day investment horizon GXO Logistics is expected to generate 0.75 times more return on investment than Clear Secure. However, GXO Logistics is 1.34 times less risky than Clear Secure. It trades about 0.02 of its potential returns per unit of risk. Clear Secure is currently generating about 0.0 per unit of risk. If you would invest  4,949  in GXO Logistics on September 12, 2024 and sell it today you would lose (1.00) from holding GXO Logistics or give up 0.02% of portfolio value over 90 days.

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

GXO Logistics  vs.  Clear Secure

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.

Clear Secure

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Clear Secure has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Clear Secure is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with GXO Logistics and Clear Secure

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

The idea behind GXO Logistics and Clear Secure 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.

Check out your portfolio center.

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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.