Correlation Between ChampionX and Nextier Oilfield
Can any of the company-specific risk be diversified away by investing in both ChampionX and Nextier Oilfield 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 Nextier Oilfield into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ChampionX and Nextier Oilfield Solutions, you can compare the effects of market volatilities on ChampionX and Nextier Oilfield 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 Nextier Oilfield. Check out your portfolio center. Please also check ongoing floating volatility patterns of ChampionX and Nextier Oilfield.
Diversification Opportunities for ChampionX and Nextier Oilfield
0.21 | Correlation Coefficient |
Modest diversification
The 3 months correlation between ChampionX and Nextier is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding ChampionX and Nextier Oilfield Solutions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nextier Oilfield Sol 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 Nextier Oilfield. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nextier Oilfield Sol has no effect on the direction of ChampionX i.e., ChampionX and Nextier Oilfield go up and down completely randomly.
Pair Corralation between ChampionX and Nextier Oilfield
Considering the 90-day investment horizon ChampionX is expected to generate 4.82 times less return on investment than Nextier Oilfield. But when comparing it to its historical volatility, ChampionX is 1.67 times less risky than Nextier Oilfield. It trades about 0.02 of its potential returns per unit of risk. Nextier Oilfield Solutions is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 926.00 in Nextier Oilfield Solutions on August 27, 2024 and sell it today you would earn a total of 209.00 from holding Nextier Oilfield Solutions or generate 22.57% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 31.85% |
| Values | Daily Returns |
ChampionX vs. Nextier Oilfield Solutions
Performance |
| Timeline |
| ChampionX |
| Nextier Oilfield Sol |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
ChampionX and Nextier Oilfield Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ChampionX and Nextier Oilfield
The main advantage of trading using opposite ChampionX and Nextier Oilfield positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ChampionX position performs unexpectedly, Nextier Oilfield 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 Nextier Oilfield will offset losses from the drop in Nextier Oilfield's long position.| ChampionX vs. Expro Group Holdings | ChampionX vs. Ranger Energy Services | ChampionX vs. Cactus Inc | ChampionX vs. MRC Global |
| Nextier Oilfield vs. ProPetro Holding Corp | Nextier Oilfield vs. Select Energy Services | Nextier Oilfield vs. Liberty Oilfield Services | Nextier Oilfield vs. Cactus Inc |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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