Correlation Between ChampionX and TechnipFMC PLC
Can any of the company-specific risk be diversified away by investing in both ChampionX and TechnipFMC PLC 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 ChampionX and TechnipFMC PLC into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ChampionX and TechnipFMC PLC, you can compare the effects of market volatilities on ChampionX and TechnipFMC PLC 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 ChampionX with a short position of TechnipFMC PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of ChampionX and TechnipFMC PLC.
Diversification Opportunities for ChampionX and TechnipFMC PLC
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between ChampionX and TechnipFMC is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding ChampionX and TechnipFMC PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TechnipFMC PLC and ChampionX 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 ChampionX are associated (or correlated) with TechnipFMC PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TechnipFMC PLC has no effect on the direction of ChampionX i.e., ChampionX and TechnipFMC PLC go up and down completely randomly.
Pair Corralation between ChampionX and TechnipFMC PLC
Considering the 90-day investment horizon ChampionX is expected to generate 3.97 times less return on investment than TechnipFMC PLC. But when comparing it to its historical volatility, ChampionX is 1.02 times less risky than TechnipFMC PLC. It trades about 0.02 of its potential returns per unit of risk. TechnipFMC PLC is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 2,052 in TechnipFMC PLC on August 27, 2024 and sell it today you would earn a total of 1,031 from holding TechnipFMC PLC or generate 50.24% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
ChampionX vs. TechnipFMC PLC
Performance |
| Timeline |
| ChampionX |
| TechnipFMC PLC |
ChampionX and TechnipFMC PLC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ChampionX and TechnipFMC PLC
The main advantage of trading using opposite ChampionX and TechnipFMC PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ChampionX position performs unexpectedly, TechnipFMC PLC 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 TechnipFMC PLC will offset losses from the drop in TechnipFMC PLC's long position.| ChampionX vs. Expro Group Holdings | ChampionX vs. Ranger Energy Services | ChampionX vs. Cactus Inc | ChampionX vs. MRC Global |
| TechnipFMC PLC vs. Oceaneering International | TechnipFMC PLC vs. NOV Inc | TechnipFMC PLC vs. Flowserve | TechnipFMC PLC vs. Core Laboratories NV |
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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