Correlation Between GXO Logistics and Virtus ETF

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

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

Diversification Opportunities for GXO Logistics and Virtus ETF

0.52

Correlation Coefficient

GXO Logistics  Virtus ETF

Very weak diversification

The 3 months correlation between GXO and Virtus is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding GXO Logistics and Virtus ETF Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Virtus ETF Trust 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 Virtus ETF. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Virtus ETF Trust has no effect on the direction of GXO Logistics i.e., GXO Logistics and Virtus ETF go up and down completely randomly.

Pair Corralation between GXO Logistics and Virtus ETF

Considering the 90-day investment horizon GXO Logistics is expected to generate 2.68 times more return on investment than Virtus ETF. However, GXO Logistics is 2.68 times more volatile than Virtus ETF Trust. It trades about -0.01 of its potential returns per unit of risk. Virtus ETF Trust is currently generating about -0.07 per unit of risk. If you would invest  4,226  in GXO Logistics on December 24, 2024 and sell it today you would lose (189.00) from holding GXO Logistics or give up 4.47% of portfolio value over 90 days.

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

GXO Logistics  vs.  Virtus ETF Trust

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.

Virtus ETF Trust

Risk-Adjusted Performance

Very Weak

Over the last 90 days Virtus ETF Trust has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable technical and fundamental indicators, Virtus ETF 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 Virtus ETF

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

The idea behind GXO Logistics and Virtus ETF Trust 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.