Correlation Between ChampionX and Grocery Outlet
Can any of the company-specific risk be diversified away by investing in both ChampionX and Grocery Outlet 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 Grocery Outlet into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ChampionX and Grocery Outlet Holding, you can compare the effects of market volatilities on ChampionX and Grocery Outlet 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 Grocery Outlet. Check out your portfolio center. Please also check ongoing floating volatility patterns of ChampionX and Grocery Outlet.
Diversification Opportunities for ChampionX and Grocery Outlet
0.23 | Correlation Coefficient |
Modest diversification
The 3 months correlation between ChampionX and Grocery is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding ChampionX and Grocery Outlet Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Grocery Outlet Holding 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 Grocery Outlet. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Grocery Outlet Holding has no effect on the direction of ChampionX i.e., ChampionX and Grocery Outlet go up and down completely randomly.
Pair Corralation between ChampionX and Grocery Outlet
Considering the 90-day investment horizon ChampionX is expected to generate 0.39 times more return on investment than Grocery Outlet. However, ChampionX is 2.55 times less risky than Grocery Outlet. It trades about -0.36 of its potential returns per unit of risk. Grocery Outlet Holding is currently generating about -0.15 per unit of risk. If you would invest 3,053 in ChampionX on September 20, 2024 and sell it today you would lose (299.00) from holding ChampionX or give up 9.79% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
ChampionX vs. Grocery Outlet Holding
Performance |
| Timeline |
| ChampionX |
| Grocery Outlet Holding |
ChampionX and Grocery Outlet Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ChampionX and Grocery Outlet
The main advantage of trading using opposite ChampionX and Grocery Outlet positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ChampionX position performs unexpectedly, Grocery Outlet 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 Grocery Outlet will offset losses from the drop in Grocery Outlet's long position.| ChampionX vs. Expro Group Holdings | ChampionX vs. Ranger Energy Services | ChampionX vs. Cactus Inc | ChampionX vs. MRC Global |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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