Correlation Between Royal Mail and GXO Logistics
Can any of the company-specific risk be diversified away by investing in both Royal Mail 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 Royal Mail and GXO Logistics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Royal Mail PLC and GXO Logistics, you can compare the effects of market volatilities on Royal Mail 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 Royal Mail with a short position of GXO Logistics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Royal Mail and GXO Logistics.
Diversification Opportunities for Royal Mail and GXO Logistics
-0.71 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Royal and GXO is -0.71. Overlapping area represents the amount of risk that can be diversified away by holding Royal Mail PLC and GXO Logistics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GXO Logistics and Royal Mail 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 Royal Mail PLC 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 Royal Mail i.e., Royal Mail and GXO Logistics go up and down completely randomly.
Pair Corralation between Royal Mail and GXO Logistics
Assuming the 90 days horizon Royal Mail PLC is expected to generate 0.27 times more return on investment than GXO Logistics. However, Royal Mail PLC is 3.66 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 -0.27 per unit of risk. If you would invest 871.00 in Royal Mail PLC on October 25, 2024 and sell it today you would earn a total of 18.00 from holding Royal Mail PLC or generate 2.07% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 97.44% |
| Values | Daily Returns |
Royal Mail PLC vs. GXO Logistics
Performance |
| Timeline |
| Royal Mail PLC |
| GXO Logistics |
Royal Mail and GXO Logistics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Royal Mail and GXO Logistics
The main advantage of trading using opposite Royal Mail and GXO Logistics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Royal Mail 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.| Royal Mail vs. FedEx | Royal Mail vs. United Parcel Service | Royal Mail vs. Freightos Limited Ordinary | Royal Mail vs. Addentax Group Corp |
| GXO Logistics vs. Forward Air | GXO Logistics vs. Landstar System | GXO Logistics vs. JB Hunt Transport | GXO Logistics vs. Expeditors International of |
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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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