Correlation Between ChampionX and Newpark Resources
Can any of the company-specific risk be diversified away by investing in both ChampionX and Newpark Resources 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 Newpark Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ChampionX and Newpark Resources, you can compare the effects of market volatilities on ChampionX and Newpark Resources 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 Newpark Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of ChampionX and Newpark Resources.
Diversification Opportunities for ChampionX and Newpark Resources
0.46 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between ChampionX and Newpark is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding ChampionX and Newpark Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Newpark Resources 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 Newpark Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Newpark Resources has no effect on the direction of ChampionX i.e., ChampionX and Newpark Resources go up and down completely randomly.
Pair Corralation between ChampionX and Newpark Resources
Considering the 90-day investment horizon ChampionX is expected to generate 1.47 times less return on investment than Newpark Resources. But when comparing it to its historical volatility, ChampionX is 1.25 times less risky than Newpark Resources. It trades about 0.02 of its potential returns per unit of risk. Newpark Resources is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 720.00 in Newpark Resources on August 27, 2024 and sell it today you would earn a total of 72.00 from holding Newpark Resources or generate 10.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
ChampionX vs. Newpark Resources
Performance |
| Timeline |
| ChampionX |
| Newpark Resources |
ChampionX and Newpark Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ChampionX and Newpark Resources
The main advantage of trading using opposite ChampionX and Newpark Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ChampionX position performs unexpectedly, Newpark Resources 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 Newpark Resources will offset losses from the drop in Newpark Resources' long position.| ChampionX vs. Expro Group Holdings | ChampionX vs. Ranger Energy Services | ChampionX vs. Cactus Inc | ChampionX vs. MRC Global |
| Newpark Resources vs. Now Inc | Newpark Resources vs. Enerflex | Newpark Resources vs. Bristow Group | Newpark Resources vs. Forum Energy Technologies |
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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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