Correlation Between Range Resources and Northern

Can any of the company-specific risk be diversified away by investing in both Range Resources and Northern 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 Northern 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 Northern Quality Esg, you can compare the effects of market volatilities on Range Resources and Northern 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 Northern. Check out your portfolio center. Please also check ongoing floating volatility patterns of Range Resources and Northern.

Diversification Opportunities for Range Resources and Northern

0.7

Correlation Coefficient

Range Resources  Northern

Poor diversification

The 3 months correlation between Range and Northern is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Range Resources Corp and Northern Quality Esg in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Northern Quality Esg 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 Northern. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Northern Quality Esg has no effect on the direction of Range Resources i.e., Range Resources and Northern go up and down completely randomly.

Pair Corralation between Range Resources and Northern

Considering the 90-day investment horizon Range Resources Corp is expected to generate 1.4 times more return on investment than Northern. However, Range Resources is 1.4 times more volatile than Northern Quality Esg. It trades about 0.53 of its potential returns per unit of risk. Northern Quality Esg is currently generating about -0.13 per unit of risk. If you would invest  3,214  in Range Resources Corp on January 17, 2024 and sell it today you would earn a total of  387.00  from holding Range Resources Corp or generate 12.04% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	95.24%
Values	Daily Returns

Range Resources Corp  vs.  Northern Quality Esg

Range Resources Corp

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Range Resources Corp are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of rather conflicting basic indicators, Range Resources exhibited solid returns over the last few months and may actually be approaching a breakup point.

Northern Quality Esg

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Northern Quality Esg are ranked lower than 8 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Northern is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Range Resources and Northern

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

The idea behind Range Resources Corp and Northern Quality Esg 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.