Correlation Between CH Robinson and GXO Logistics

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

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

Diversification Opportunities for CH Robinson and GXO Logistics

0.58

Correlation Coefficient

CH Robinson  GXO Logistics

Very weak diversification

The 3 months correlation between CHRW and GXO is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding CH Robinson Worldwide and GXO Logistics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GXO Logistics and CH Robinson 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 CH Robinson Worldwide 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 CH Robinson i.e., CH Robinson and GXO Logistics go up and down completely randomly.

Pair Corralation between CH Robinson and GXO Logistics

Given the investment horizon of 90 days CH Robinson Worldwide is expected to generate 0.58 times more return on investment than GXO Logistics. However, CH Robinson Worldwide is 1.73 times less risky than GXO Logistics. It trades about -0.01 of its potential returns per unit of risk. GXO Logistics is currently generating about -0.03 per unit of risk. If you would invest  10,366  in CH Robinson Worldwide on December 26, 2024 and sell it today you would lose (199.00) from holding CH Robinson Worldwide or give up 1.92% of portfolio value over 90 days.

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

CH Robinson Worldwide  vs.  GXO Logistics

CH Robinson Worldwide

Risk-Adjusted Performance

Very Weak

Over the last 90 days CH Robinson Worldwide has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, CH Robinson is not utilizing all of its potentials. The newest stock price fuss, may contribute to near-short-term losses for the sophisticated 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 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.

Pair Trading with CH Robinson and GXO Logistics

The main advantage of trading using opposite CH Robinson and GXO Logistics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CH Robinson 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 CH Robinson Worldwide 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.