Correlation Between ChampionX and NATIONAL

Can any of the company-specific risk be diversified away by investing in both ChampionX and NATIONAL 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 ChampionX and NATIONAL into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between ChampionX and NATIONAL RURAL UTILS, you can compare the effects of market volatilities on ChampionX and NATIONAL 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 ChampionX with a short position of NATIONAL. Check out your portfolio center. Please also check ongoing floating volatility patterns of ChampionX and NATIONAL.

Diversification Opportunities for ChampionX and NATIONAL

-0.57

Correlation Coefficient

ChampionX  NATIONAL

Excellent diversification

The 3 months correlation between ChampionX and NATIONAL is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding ChampionX and NATIONAL RURAL UTILS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NATIONAL RURAL UTILS and ChampionX 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 ChampionX are associated (or correlated) with NATIONAL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NATIONAL RURAL UTILS has no effect on the direction of ChampionX i.e., ChampionX and NATIONAL go up and down completely randomly.

Pair Corralation between ChampionX and NATIONAL

Considering the 90-day investment horizon ChampionX is expected to generate 1.47 times more return on investment than NATIONAL. However, ChampionX is 1.47 times more volatile than NATIONAL RURAL UTILS. It trades about 0.11 of its potential returns per unit of risk. NATIONAL RURAL UTILS is currently generating about 0.07 per unit of risk. If you would invest  2,661  in ChampionX on December 30, 2024 and sell it today you would earn a total of  326.00  from holding ChampionX or generate 12.25% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	61.29%
Values	Daily Returns

ChampionX  vs.  NATIONAL RURAL UTILS

ChampionX

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in ChampionX are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating technical indicators, ChampionX showed solid returns over the last few months and may actually be approaching a breakup point.

NATIONAL RURAL UTILS

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in NATIONAL RURAL UTILS are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, NATIONAL is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with ChampionX and NATIONAL

The main advantage of trading using opposite ChampionX and NATIONAL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ChampionX position performs unexpectedly, NATIONAL 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 NATIONAL will offset losses from the drop in NATIONAL's long position.

The idea behind ChampionX and NATIONAL RURAL UTILS 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.

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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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.