Correlation Between Air T and GXO Logistics

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

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

Diversification Opportunities for Air T and GXO Logistics

0.74

Correlation Coefficient

Air T  GXO Logistics

Poor diversification

The 3 months correlation between Air and GXO is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Air T Inc and GXO Logistics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GXO Logistics and Air T 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 Air T Inc 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 Air T i.e., Air T and GXO Logistics go up and down completely randomly.

Pair Corralation between Air T and GXO Logistics

Given the investment horizon of 90 days Air T Inc is expected to generate 0.9 times more return on investment than GXO Logistics. However, Air T Inc is 1.12 times less risky than GXO Logistics. It trades about -0.05 of its potential returns per unit of risk. GXO Logistics is currently generating about -0.07 per unit of risk. If you would invest  1,966  in Air T Inc on December 17, 2024 and sell it today you would lose (181.00) from holding Air T Inc or give up 9.21% of portfolio value over 90 days.

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

Air T Inc  vs.  GXO Logistics

Air T Inc

Risk-Adjusted Performance

Very Weak

Over the last 90 days Air T Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest fragile performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

GXO Logistics

Risk-Adjusted Performance

Very Weak

Over the last 90 days GXO Logistics has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Air T and GXO Logistics

The main advantage of trading using opposite Air T and GXO Logistics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Air T 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 Air T Inc 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.