Correlation Between Precision Drilling and ChampionX
Can any of the company-specific risk be diversified away by investing in both Precision Drilling 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 Precision Drilling and ChampionX into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Precision Drilling and ChampionX, you can compare the effects of market volatilities on Precision Drilling 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 Precision Drilling with a short position of ChampionX. Check out your portfolio center. Please also check ongoing floating volatility patterns of Precision Drilling and ChampionX.
Diversification Opportunities for Precision Drilling and ChampionX
0.33 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Precision and ChampionX is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Precision Drilling and ChampionX in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ChampionX and Precision Drilling 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 Precision Drilling 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 Precision Drilling i.e., Precision Drilling and ChampionX go up and down completely randomly.
Pair Corralation between Precision Drilling and ChampionX
Considering the 90-day investment horizon Precision Drilling is expected to under-perform the ChampionX. In addition to that, Precision Drilling is 1.23 times more volatile than ChampionX. It trades about -0.01 of its total potential returns per unit of risk. ChampionX is currently generating about 0.02 per unit of volatility. If you would invest 2,796 in ChampionX on September 14, 2024 and sell it today you would earn a total of 157.00 from holding ChampionX or generate 5.62% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 99.8% |
| Values | Daily Returns |
Precision Drilling vs. ChampionX
Performance |
| Timeline |
| Precision Drilling |
| ChampionX |
Precision Drilling and ChampionX Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Precision Drilling and ChampionX
The main advantage of trading using opposite Precision Drilling and ChampionX positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Precision Drilling 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.| Precision Drilling vs. Helmerich and Payne | Precision Drilling vs. Nabors Industries | Precision Drilling vs. Seadrill Limited | Precision Drilling vs. Patterson UTI Energy |
| 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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