Correlation Between ChampionX and Trupanion

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

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

Diversification Opportunities for ChampionX and Trupanion

-0.34

Correlation Coefficient

ChampionX  Trupanion

Very good diversification

The 3 months correlation between ChampionX and Trupanion is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding ChampionX and Trupanion in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Trupanion 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 Trupanion. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Trupanion has no effect on the direction of ChampionX i.e., ChampionX and Trupanion go up and down completely randomly.

Pair Corralation between ChampionX and Trupanion

Considering the 90-day investment horizon ChampionX is expected to under-perform the Trupanion. But the stock apears to be less risky and, when comparing its historical volatility, ChampionX is 1.45 times less risky than Trupanion. The stock trades about -0.12 of its potential returns per unit of risk. The Trupanion is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  4,235  in Trupanion on September 24, 2024 and sell it today you would earn a total of  740.00  from holding Trupanion or generate 17.47% return on investment over 90 days.

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

ChampionX  vs.  Trupanion

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 inconsistent performance in the last few months, the Stock's technical indicators remain fairly strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Trupanion

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Trupanion are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Trupanion reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with ChampionX and Trupanion

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

The idea behind ChampionX and Trupanion 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.