Correlation Between Grocery Outlet and ChampionX
Can any of the company-specific risk be diversified away by investing in both Grocery Outlet and ChampionX 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 Grocery Outlet and ChampionX into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Grocery Outlet Holding and ChampionX, you can compare the effects of market volatilities on Grocery Outlet and ChampionX 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 Grocery Outlet with a short position of ChampionX. Check out your portfolio center. Please also check ongoing floating volatility patterns of Grocery Outlet and ChampionX.
Diversification Opportunities for Grocery Outlet and ChampionX
0.23 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Grocery and ChampionX is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Grocery Outlet Holding and ChampionX in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ChampionX and Grocery Outlet 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 Grocery Outlet Holding are associated (or correlated) with ChampionX. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ChampionX has no effect on the direction of Grocery Outlet i.e., Grocery Outlet and ChampionX go up and down completely randomly.
Pair Corralation between Grocery Outlet and ChampionX
Allowing for the 90-day total investment horizon Grocery Outlet Holding is expected to under-perform the ChampionX. In addition to that, Grocery Outlet is 2.55 times more volatile than ChampionX. It trades about -0.15 of its total potential returns per unit of risk. ChampionX is currently generating about -0.36 per unit of volatility. 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 |
Grocery Outlet Holding vs. ChampionX
Performance |
| Timeline |
| Grocery Outlet Holding |
| ChampionX |
Grocery Outlet and ChampionX Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Grocery Outlet and ChampionX
The main advantage of trading using opposite Grocery Outlet and ChampionX positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Grocery Outlet position performs unexpectedly, ChampionX 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 ChampionX will offset losses from the drop in ChampionX's long position.The idea behind Grocery Outlet Holding and ChampionX pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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