Correlation Between ChampionX and Deluxe

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

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

Diversification Opportunities for ChampionX and Deluxe

-0.14

Correlation Coefficient

ChampionX  Deluxe

Good diversification

The 3 months correlation between ChampionX and Deluxe is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding ChampionX and Deluxe in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Deluxe 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 Deluxe. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Deluxe has no effect on the direction of ChampionX i.e., ChampionX and Deluxe go up and down completely randomly.

Pair Corralation between ChampionX and Deluxe

Considering the 90-day investment horizon ChampionX is expected to under-perform the Deluxe. But the stock apears to be less risky and, when comparing its historical volatility, ChampionX is 1.16 times less risky than Deluxe. The stock trades about -0.08 of its potential returns per unit of risk. The Deluxe is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  1,924  in Deluxe on September 28, 2024 and sell it today you would earn a total of  375.00  from holding Deluxe or generate 19.49% return on investment over 90 days.

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

ChampionX  vs.  Deluxe

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 latest unfluctuating performance, the Stock's technical indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Deluxe

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Deluxe are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating essential indicators, Deluxe showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with ChampionX and Deluxe

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

The idea behind ChampionX and Deluxe 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.

Check out your portfolio center.

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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.