Correlation Between Weatherford International and ChampionX
Can any of the company-specific risk be diversified away by investing in both Weatherford International 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 Weatherford International and ChampionX into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Weatherford International PLC and ChampionX, you can compare the effects of market volatilities on Weatherford International 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 Weatherford International with a short position of ChampionX. Check out your portfolio center. Please also check ongoing floating volatility patterns of Weatherford International and ChampionX.
Diversification Opportunities for Weatherford International and ChampionX
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Weatherford and ChampionX is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Weatherford International PLC and ChampionX in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ChampionX and Weatherford International 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 Weatherford International PLC 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 Weatherford International i.e., Weatherford International and ChampionX go up and down completely randomly.
Pair Corralation between Weatherford International and ChampionX
Given the investment horizon of 90 days Weatherford International PLC is expected to under-perform the ChampionX. But the stock apears to be less risky and, when comparing its historical volatility, Weatherford International PLC is 1.12 times less risky than ChampionX. The stock trades about -0.33 of its potential returns per unit of risk. The ChampionX is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 2,735 in ChampionX on November 4, 2024 and sell it today you would earn a total of 129.00 from holding ChampionX or generate 4.72% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Weatherford International PLC vs. ChampionX
Performance |
| Timeline |
| Weatherford International |
| ChampionX |
Weatherford International and ChampionX Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Weatherford International and ChampionX
The main advantage of trading using opposite Weatherford International and ChampionX positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Weatherford International 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.| Weatherford International vs. Bristow Group | Weatherford International vs. RPC Inc | Weatherford International vs. NOV Inc | Weatherford International vs. Oceaneering International |
| 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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