Correlation Between ProPetro Holding and ChampionX
Can any of the company-specific risk be diversified away by investing in both ProPetro Holding 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 ProPetro Holding and ChampionX into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ProPetro Holding Corp and ChampionX, you can compare the effects of market volatilities on ProPetro Holding 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 ProPetro Holding with a short position of ChampionX. Check out your portfolio center. Please also check ongoing floating volatility patterns of ProPetro Holding and ChampionX.
Diversification Opportunities for ProPetro Holding and ChampionX
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between ProPetro and ChampionX is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding ProPetro Holding Corp and ChampionX in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ChampionX and ProPetro Holding 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 ProPetro Holding Corp 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 ProPetro Holding i.e., ProPetro Holding and ChampionX go up and down completely randomly.
Pair Corralation between ProPetro Holding and ChampionX
Given the investment horizon of 90 days ProPetro Holding Corp is expected to generate 1.74 times more return on investment than ChampionX. However, ProPetro Holding is 1.74 times more volatile than ChampionX. It trades about 0.08 of its potential returns per unit of risk. ChampionX is currently generating about 0.03 per unit of risk. If you would invest 766.00 in ProPetro Holding Corp on August 30, 2024 and sell it today you would earn a total of 82.00 from holding ProPetro Holding Corp or generate 10.7% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 97.73% |
| Values | Daily Returns |
ProPetro Holding Corp vs. ChampionX
Performance |
| Timeline |
| ProPetro Holding Corp |
| ChampionX |
ProPetro Holding and ChampionX Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ProPetro Holding and ChampionX
The main advantage of trading using opposite ProPetro Holding and ChampionX positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ProPetro Holding 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.| ProPetro Holding vs. Ranger Energy Services | ProPetro Holding vs. Newpark Resources | ProPetro Holding vs. RPC Inc | ProPetro Holding vs. Archrock |
| 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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