Correlation Between ChampionX and NOV

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

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

Diversification Opportunities for ChampionX and NOV

0.75

Correlation Coefficient

ChampionX  NOV

Poor diversification

The 3 months correlation between ChampionX and NOV is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding ChampionX and NOV Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NOV 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 NOV. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NOV Inc has no effect on the direction of ChampionX i.e., ChampionX and NOV go up and down completely randomly.

Pair Corralation between ChampionX and NOV

Considering the 90-day investment horizon ChampionX is expected to generate 1.07 times more return on investment than NOV. However, ChampionX is 1.07 times more volatile than NOV Inc. It trades about -0.03 of its potential returns per unit of risk. NOV Inc is currently generating about -0.07 per unit of risk. If you would invest  2,974  in ChampionX on September 18, 2024 and sell it today you would lose (140.00) from holding ChampionX or give up 4.71% of portfolio value over 90 days.

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

ChampionX  vs.  NOV 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.

NOV Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days NOV Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest conflicting performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

Pair Trading with ChampionX and NOV

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

The idea behind ChampionX and NOV 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.