Correlation Between Barnes and GXO Logistics
Can any of the company-specific risk be diversified away by investing in both Barnes 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 Barnes and GXO Logistics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Barnes Group and GXO Logistics, you can compare the effects of market volatilities on Barnes 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 Barnes with a short position of GXO Logistics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Barnes and GXO Logistics.
Diversification Opportunities for Barnes and GXO Logistics
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Barnes and GXO is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Barnes Group and GXO Logistics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GXO Logistics and Barnes 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 Barnes Group 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 Barnes i.e., Barnes and GXO Logistics go up and down completely randomly.
Pair Corralation between Barnes and GXO Logistics
Taking into account the 90-day investment horizon Barnes is expected to generate 1.19 times less return on investment than GXO Logistics. But when comparing it to its historical volatility, Barnes Group is 1.08 times less risky than GXO Logistics. It trades about 0.07 of its potential returns per unit of risk. GXO Logistics is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 4,898 in GXO Logistics on August 24, 2024 and sell it today you would earn a total of 1,102 from holding GXO Logistics or generate 22.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Barnes Group vs. GXO Logistics
Performance |
| Timeline |
| Barnes Group |
| GXO Logistics |
Barnes and GXO Logistics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Barnes and GXO Logistics
The main advantage of trading using opposite Barnes and GXO Logistics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Barnes 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.| Barnes vs. Helios Technologies | Barnes vs. Enpro Industries | Barnes vs. Omega Flex | Barnes vs. Luxfer Holdings PLC |
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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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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