Correlation Between Jeld Wen and ChampionX

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

By analyzing existing cross correlation between Jeld Wen Holding and ChampionX, you can compare the effects of market volatilities on Jeld Wen and ChampionX 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 Jeld Wen with a short position of ChampionX. Check out your portfolio center. Please also check ongoing floating volatility patterns of Jeld Wen and ChampionX.

Diversification Opportunities for Jeld Wen and ChampionX

0.44

Correlation Coefficient

Jeld Wen  ChampionX

Very weak diversification

The 3 months correlation between Jeld and ChampionX is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Jeld Wen Holding and ChampionX in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ChampionX and Jeld Wen 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 Jeld Wen Holding are associated (or correlated) with ChampionX. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ChampionX has no effect on the direction of Jeld Wen i.e., Jeld Wen and ChampionX go up and down completely randomly.

Pair Corralation between Jeld Wen and ChampionX

Given the investment horizon of 90 days Jeld Wen Holding is expected to under-perform the ChampionX. In addition to that, Jeld Wen is 2.07 times more volatile than ChampionX. It trades about -0.07 of its total potential returns per unit of risk. ChampionX is currently generating about -0.07 per unit of volatility. If you would invest  3,257  in ChampionX on September 29, 2024 and sell it today you would lose (593.00) from holding ChampionX or give up 18.21% of portfolio value over 90 days.

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

Jeld Wen Holding  vs.  ChampionX

Jeld Wen Holding

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Jeld Wen Holding has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's essential 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.

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.

Pair Trading with Jeld Wen and ChampionX

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

The idea behind Jeld Wen Holding and ChampionX 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.