Correlation Between Exxon and Range Resources
Can any of the company-specific risk be diversified away by investing in both Exxon and Range Resources 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 Exxon and Range Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Exxon Mobil Corp and Range Resources Corp, you can compare the effects of market volatilities on Exxon and Range Resources 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 Exxon with a short position of Range Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Exxon and Range Resources.
Diversification Opportunities for Exxon and Range Resources
0.93 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Exxon and Range is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Exxon Mobil Corp and Range Resources Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Range Resources Corp and Exxon 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 Exxon Mobil Corp are associated (or correlated) with Range Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Range Resources Corp has no effect on the direction of Exxon i.e., Exxon and Range Resources go up and down completely randomly.
Pair Corralation between Exxon and Range Resources
Considering the 90-day investment horizon Exxon is expected to generate 1.37 times less return on investment than Range Resources. But when comparing it to its historical volatility, Exxon Mobil Corp is 1.76 times less risky than Range Resources. It trades about 0.05 of its potential returns per unit of risk. Range Resources Corp is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 2,725 in Range Resources Corp on February 7, 2024 and sell it today you would earn a total of 970.00 from holding Range Resources Corp or generate 35.6% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Exxon Mobil Corp vs. Range Resources Corp
Performance |
| Timeline |
| Exxon Mobil Corp |
| Range Resources Corp |
Exxon and Range Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Exxon and Range Resources
The main advantage of trading using opposite Exxon and Range Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Exxon position performs unexpectedly, Range Resources 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 Range Resources will offset losses from the drop in Range Resources' long position.| Exxon vs. Aquagold International | Exxon vs. Morningstar Unconstrained Allocation | Exxon vs. Thrivent High Yield | Exxon vs. Via Renewables |
| Range Resources vs. Sky Petroleum | Range Resources vs. FEC Resources | Range Resources vs. Savoy Energy Corp | Range Resources vs. Spindletop OG |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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