Correlation Between Armada Hflr and ChampionX
Can any of the company-specific risk be diversified away by investing in both Armada Hflr and ChampionX 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 Armada Hflr and ChampionX into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Armada Hflr Pr and ChampionX, you can compare the effects of market volatilities on Armada Hflr and ChampionX 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 Armada Hflr with a short position of ChampionX. Check out your portfolio center. Please also check ongoing floating volatility patterns of Armada Hflr and ChampionX.
Diversification Opportunities for Armada Hflr and ChampionX
-0.03 | Correlation Coefficient |
Good diversification
The 3 months correlation between Armada and ChampionX is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding Armada Hflr Pr and ChampionX in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ChampionX and Armada Hflr 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 Armada Hflr Pr are associated (or correlated) with ChampionX. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ChampionX has no effect on the direction of Armada Hflr i.e., Armada Hflr and ChampionX go up and down completely randomly.
Pair Corralation between Armada Hflr and ChampionX
Considering the 90-day investment horizon Armada Hflr Pr is expected to generate 0.59 times more return on investment than ChampionX. However, Armada Hflr Pr is 1.7 times less risky than ChampionX. It trades about -0.13 of its potential returns per unit of risk. ChampionX is currently generating about -0.4 per unit of risk. If you would invest 1,107 in Armada Hflr Pr on September 18, 2024 and sell it today you would lose (24.00) from holding Armada Hflr Pr or give up 2.17% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Armada Hflr Pr vs. ChampionX
Performance |
| Timeline |
| Armada Hflr Pr |
| ChampionX |
Armada Hflr and ChampionX Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Armada Hflr and ChampionX
The main advantage of trading using opposite Armada Hflr and ChampionX positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Armada Hflr position performs unexpectedly, ChampionX 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 ChampionX will offset losses from the drop in ChampionX's long position.The idea behind Armada Hflr Pr and ChampionX 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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