Correlation Between Freightos Limited and GXO Logistics

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

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

Diversification Opportunities for Freightos Limited and GXO Logistics

-0.32

Correlation Coefficient

Freightos Limited  GXO Logistics

Very good diversification

The 3 months correlation between Freightos and GXO is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Freightos Limited Warrants and GXO Logistics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GXO Logistics and Freightos Limited 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 Freightos Limited Warrants 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 Freightos Limited i.e., Freightos Limited and GXO Logistics go up and down completely randomly.

Pair Corralation between Freightos Limited and GXO Logistics

Assuming the 90 days horizon Freightos Limited Warrants is expected to generate 3.08 times more return on investment than GXO Logistics. However, Freightos Limited is 3.08 times more volatile than GXO Logistics. It trades about 0.06 of its potential returns per unit of risk. GXO Logistics is currently generating about -0.04 per unit of risk. If you would invest  17.00  in Freightos Limited Warrants on December 29, 2024 and sell it today you would earn a total of  2.00  from holding Freightos Limited Warrants or generate 11.76% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.08%
Values	Daily Returns

Freightos Limited Warrants  vs.  GXO Logistics

Freightos Limited

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Freightos Limited Warrants are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Freightos Limited showed solid returns over the last few months and may actually be approaching a breakup point.

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 latest unsteady performance, the Stock's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Pair Trading with Freightos Limited and GXO Logistics

The main advantage of trading using opposite Freightos Limited and GXO Logistics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Freightos Limited 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 Freightos Limited Warrants 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.

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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.