Correlation Between ChampionX and TOTAL ENERGY

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

By analyzing existing cross correlation between ChampionX and TOTAL ENERGY SERVS, you can compare the effects of market volatilities on ChampionX and TOTAL ENERGY 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 TOTAL ENERGY. Check out your portfolio center. Please also check ongoing floating volatility patterns of ChampionX and TOTAL ENERGY.

Diversification Opportunities for ChampionX and TOTAL ENERGY

0.61

Correlation Coefficient

ChampionX  TOTAL ENERGY

Poor diversification

The 3 months correlation between ChampionX and TOTAL is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding ChampionX and TOTAL ENERGY SERVS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TOTAL ENERGY SERVS 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 TOTAL ENERGY. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TOTAL ENERGY SERVS has no effect on the direction of ChampionX i.e., ChampionX and TOTAL ENERGY go up and down completely randomly.

Pair Corralation between ChampionX and TOTAL ENERGY

Assuming the 90 days horizon ChampionX is expected to generate 3.58 times less return on investment than TOTAL ENERGY. In addition to that, ChampionX is 1.15 times more volatile than TOTAL ENERGY SERVS. It trades about 0.06 of its total potential returns per unit of risk. TOTAL ENERGY SERVS is currently generating about 0.26 per unit of volatility. If you would invest  586.00  in TOTAL ENERGY SERVS on September 11, 2024 and sell it today you would earn a total of  201.00  from holding TOTAL ENERGY SERVS or generate 34.3% return on investment over 90 days.

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

ChampionX  vs.  TOTAL ENERGY SERVS

ChampionX

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in ChampionX are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, ChampionX may actually be approaching a critical reversion point that can send shares even higher in January 2025.

TOTAL ENERGY SERVS

Risk-Adjusted Performance

20 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in TOTAL ENERGY SERVS are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, TOTAL ENERGY reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with ChampionX and TOTAL ENERGY

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

The idea behind ChampionX and TOTAL ENERGY SERVS 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.