Correlation Between XPO Logistics and Liberty International
Can any of the company-specific risk be diversified away by investing in both XPO Logistics and Liberty International 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 XPO Logistics and Liberty International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between XPO Logistics and Liberty International Holding, you can compare the effects of market volatilities on XPO Logistics and Liberty International 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 XPO Logistics with a short position of Liberty International. Check out your portfolio center. Please also check ongoing floating volatility patterns of XPO Logistics and Liberty International.
Diversification Opportunities for XPO Logistics and Liberty International
-0.45 | Correlation Coefficient |
Very good diversification
The 3 months correlation between XPO and Liberty is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding XPO Logistics and Liberty International Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Liberty International and XPO 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 XPO Logistics are associated (or correlated) with Liberty International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Liberty International has no effect on the direction of XPO Logistics i.e., XPO Logistics and Liberty International go up and down completely randomly.
Pair Corralation between XPO Logistics and Liberty International
Considering the 90-day investment horizon XPO Logistics is expected to generate 24.36 times less return on investment than Liberty International. But when comparing it to its historical volatility, XPO Logistics is 13.29 times less risky than Liberty International. It trades about 0.08 of its potential returns per unit of risk. Liberty International Holding is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest 0.01 in Liberty International Holding on October 22, 2024 and sell it today you would earn a total of 0.00 from holding Liberty International Holding or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 99.2% |
| Values | Daily Returns |
XPO Logistics vs. Liberty International Holding
Performance |
| Timeline |
| XPO Logistics |
| Liberty International |
XPO Logistics and Liberty International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with XPO Logistics and Liberty International
The main advantage of trading using opposite XPO Logistics and Liberty International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if XPO Logistics position performs unexpectedly, Liberty International 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 Liberty International will offset losses from the drop in Liberty International's long position.| XPO Logistics vs. Knight Transportation | XPO Logistics vs. Schneider National | XPO Logistics vs. Heartland Express | XPO Logistics vs. Saia Inc |
| Liberty International vs. Neogen | Liberty International vs. Fevertree Drinks Plc | Liberty International vs. Valneva SE ADR | Liberty International vs. Oatly Group AB |
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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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