Correlation Between MRC Global and ChampionX

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

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

Diversification Opportunities for MRC Global and ChampionX

0.53

Correlation Coefficient

MRC Global  ChampionX

Very weak diversification

The 3 months correlation between MRC and ChampionX is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding MRC Global and ChampionX in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ChampionX and MRC Global 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 MRC Global 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 MRC Global i.e., MRC Global and ChampionX go up and down completely randomly.

Pair Corralation between MRC Global and ChampionX

Considering the 90-day investment horizon MRC Global is expected to under-perform the ChampionX. In addition to that, MRC Global is 1.15 times more volatile than ChampionX. It trades about -0.07 of its total potential returns per unit of risk. ChampionX is currently generating about -0.05 per unit of volatility. If you would invest  3,084  in ChampionX on November 29, 2024 and sell it today you would lose (196.00) from holding ChampionX or give up 6.36% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

MRC Global  vs.  ChampionX

MRC Global

Risk-Adjusted Performance

Very Weak

Over the last 90 days MRC Global has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's basic indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

ChampionX

Risk-Adjusted Performance

Very Weak

Over the last 90 days ChampionX has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong technical indicators, ChampionX is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with MRC Global and ChampionX

The main advantage of trading using opposite MRC Global and ChampionX positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MRC Global 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.

The idea behind MRC Global and ChampionX 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.