Correlation Between ChampionX and TechnipFMC PLC

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

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

Diversification Opportunities for ChampionX and TechnipFMC PLC

0.44

Correlation Coefficient

ChampionX  TechnipFMC PLC

Very weak diversification

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

Pair Corralation between ChampionX and TechnipFMC PLC

Considering the 90-day investment horizon ChampionX is expected to under-perform the TechnipFMC PLC. But the stock apears to be less risky and, when comparing its historical volatility, ChampionX is 1.19 times less risky than TechnipFMC PLC. The stock trades about -0.11 of its potential returns per unit of risk. The TechnipFMC PLC is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  2,979  in TechnipFMC PLC on February 20, 2025 and sell it today you would earn a total of  9.00  from holding TechnipFMC PLC or generate 0.3% return on investment over 90 days.

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

ChampionX  vs.  TechnipFMC PLC

ChampionX

Risk-Adjusted Performance

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

TechnipFMC PLC

Risk-Adjusted Performance

Weak

Over the last 90 days TechnipFMC PLC has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong basic indicators, TechnipFMC PLC is not utilizing all of its potentials. The recent stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with ChampionX and TechnipFMC PLC

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

The idea behind ChampionX and TechnipFMC PLC 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.