Correlation Between ChampionX and Dream Finders

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

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

Diversification Opportunities for ChampionX and Dream Finders

0.16

Correlation Coefficient

ChampionX  Dream Finders

Average diversification

The 3 months correlation between ChampionX and Dream is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding ChampionX and Dream Finders Homes in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dream Finders Homes 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 Dream Finders. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dream Finders Homes has no effect on the direction of ChampionX i.e., ChampionX and Dream Finders go up and down completely randomly.

Pair Corralation between ChampionX and Dream Finders

Considering the 90-day investment horizon ChampionX is expected to generate 2.01 times less return on investment than Dream Finders. But when comparing it to its historical volatility, ChampionX is 1.55 times less risky than Dream Finders. It trades about 0.04 of its potential returns per unit of risk. Dream Finders Homes is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  3,106  in Dream Finders Homes on September 1, 2024 and sell it today you would earn a total of  221.00  from holding Dream Finders Homes or generate 7.12% return on investment over 90 days.

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

ChampionX  vs.  Dream Finders Homes

ChampionX

Risk-Adjusted Performance

3 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in ChampionX are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. 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.

Dream Finders Homes

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Dream Finders Homes are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite fairly abnormal technical and fundamental indicators, Dream Finders may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Pair Trading with ChampionX and Dream Finders

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

The idea behind ChampionX and Dream Finders Homes 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.