Correlation Between Range Resources and Brookfield Asset

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

By analyzing existing cross correlation between Range Resources Corp and Brookfield Asset Management, you can compare the effects of market volatilities on Range Resources and Brookfield Asset 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 Range Resources with a short position of Brookfield Asset. Check out your portfolio center. Please also check ongoing floating volatility patterns of Range Resources and Brookfield Asset.

Diversification Opportunities for Range Resources and Brookfield Asset

-0.05

Correlation Coefficient

Range Resources  Brookfield Asset

Good diversification

The 3 months correlation between Range and Brookfield is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding Range Resources Corp and Brookfield Asset Management in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Brookfield Asset Man and Range Resources 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 Range Resources Corp are associated (or correlated) with Brookfield Asset. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Brookfield Asset Man has no effect on the direction of Range Resources i.e., Range Resources and Brookfield Asset go up and down completely randomly.

Pair Corralation between Range Resources and Brookfield Asset

Considering the 90-day investment horizon Range Resources Corp is expected to generate 1.19 times more return on investment than Brookfield Asset. However, Range Resources is 1.19 times more volatile than Brookfield Asset Management. It trades about 0.03 of its potential returns per unit of risk. Brookfield Asset Management is currently generating about 0.0 per unit of risk. If you would invest  2,708  in Range Resources Corp on February 4, 2024 and sell it today you would earn a total of  863.00  from holding Range Resources Corp or generate 31.87% return on investment over 90 days.

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

Range Resources Corp  vs.  Brookfield Asset Management

Range Resources Corp

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Range Resources Corp are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak basic indicators, Range Resources exhibited solid returns over the last few months and may actually be approaching a breakup point.

Brookfield Asset Man

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Brookfield Asset Management has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Brookfield Asset is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Range Resources and Brookfield Asset

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

The idea behind Range Resources Corp and Brookfield Asset Management 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.