Correlation Between ChampionX and Western Sierra
Can any of the company-specific risk be diversified away by investing in both ChampionX and Western Sierra 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 Western Sierra into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ChampionX and Western Sierra Mining, you can compare the effects of market volatilities on ChampionX and Western Sierra 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 Western Sierra. Check out your portfolio center. Please also check ongoing floating volatility patterns of ChampionX and Western Sierra.
Diversification Opportunities for ChampionX and Western Sierra
0.02 | Correlation Coefficient |
Significant diversification
The 3 months correlation between ChampionX and Western is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding ChampionX and Western Sierra Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Western Sierra Mining 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 Western Sierra. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Western Sierra Mining has no effect on the direction of ChampionX i.e., ChampionX and Western Sierra go up and down completely randomly.
Pair Corralation between ChampionX and Western Sierra
Considering the 90-day investment horizon ChampionX is expected to under-perform the Western Sierra. But the stock apears to be less risky and, when comparing its historical volatility, ChampionX is 77.88 times less risky than Western Sierra. The stock trades about -0.02 of its potential returns per unit of risk. The Western Sierra Mining is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest 0.88 in Western Sierra Mining on September 3, 2024 and sell it today you would lose (0.20) from holding Western Sierra Mining or give up 22.73% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 99.32% |
| Values | Daily Returns |
ChampionX vs. Western Sierra Mining
Performance |
| Timeline |
| ChampionX |
| Western Sierra Mining |
ChampionX and Western Sierra Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ChampionX and Western Sierra
The main advantage of trading using opposite ChampionX and Western Sierra positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ChampionX position performs unexpectedly, Western Sierra 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 Western Sierra will offset losses from the drop in Western Sierra's long position.| ChampionX vs. Expro Group Holdings | ChampionX vs. Ranger Energy Services | ChampionX vs. Cactus Inc | ChampionX vs. MRC Global |
| Western Sierra vs. Green Cures Botanical | Western Sierra vs. Cann American Corp | Western Sierra vs. Galexxy Holdings | Western Sierra vs. Indoor Harvest Corp |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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