Correlation Between ChampionX and BCE

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

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

Diversification Opportunities for ChampionX and BCE

0.08

Correlation Coefficient

ChampionX  BCE

Significant diversification

The 3 months correlation between ChampionX and BCE is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding ChampionX and BCE Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BCE Inc 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 BCE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BCE Inc has no effect on the direction of ChampionX i.e., ChampionX and BCE go up and down completely randomly.

Pair Corralation between ChampionX and BCE

Considering the 90-day investment horizon ChampionX is expected to generate 1.48 times more return on investment than BCE. However, ChampionX is 1.48 times more volatile than BCE Inc. It trades about -0.06 of its potential returns per unit of risk. BCE Inc is currently generating about -0.12 per unit of risk. If you would invest  3,504  in ChampionX on September 18, 2024 and sell it today you would lose (670.00) from holding ChampionX or give up 19.12% of portfolio value over 90 days.

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

ChampionX  vs.  BCE Inc

ChampionX

Risk-Adjusted Performance

0 of 100

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 latest stock price disturbance, may contribute to short-term losses for the investors.

BCE Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days BCE Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's fundamental indicators remain rather sound which may send shares a bit higher in January 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with ChampionX and BCE

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

The idea behind ChampionX and BCE Inc 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.