Correlation Between Oil States and ChampionX
Can any of the company-specific risk be diversified away by investing in both Oil States 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 Oil States and ChampionX into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Oil States International and ChampionX, you can compare the effects of market volatilities on Oil States 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 Oil States with a short position of ChampionX. Check out your portfolio center. Please also check ongoing floating volatility patterns of Oil States and ChampionX.
Diversification Opportunities for Oil States and ChampionX
0.53 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Oil and ChampionX is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Oil States International and ChampionX in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ChampionX and Oil States 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 Oil States International 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 Oil States i.e., Oil States and ChampionX go up and down completely randomly.
Pair Corralation between Oil States and ChampionX
Considering the 90-day investment horizon Oil States International is expected to generate 1.38 times more return on investment than ChampionX. However, Oil States is 1.38 times more volatile than ChampionX. It trades about 0.04 of its potential returns per unit of risk. ChampionX is currently generating about 0.0 per unit of risk. If you would invest 489.00 in Oil States International on November 2, 2024 and sell it today you would earn a total of 36.00 from holding Oil States International or generate 7.36% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Oil States International vs. ChampionX
Performance |
| Timeline |
| Oil States International |
| ChampionX |
Oil States and ChampionX Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Oil States and ChampionX
The main advantage of trading using opposite Oil States and ChampionX positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Oil States 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.| Oil States vs. Oceaneering International | Oil States vs. ChampionX | Oil States vs. TechnipFMC PLC | Oil States vs. Helix Energy Solutions |
| 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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