Correlation Between Retail Estates and Range Resources

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

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

Diversification Opportunities for Retail Estates and Range Resources

-0.76

Correlation Coefficient

Retail Estates  Range Resources

Pay attention - limited upside

The 3 months correlation between Retail and Range is -0.76. Overlapping area represents the amount of risk that can be diversified away by holding Retail Estates NV 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 Retail Estates 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 Retail Estates NV 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 Retail Estates i.e., Retail Estates and Range Resources go up and down completely randomly.

Pair Corralation between Retail Estates and Range Resources

Assuming the 90 days horizon Retail Estates NV is expected to under-perform the Range Resources. In addition to that, Retail Estates is 1.23 times more volatile than Range Resources Corp. It trades about -0.18 of its total potential returns per unit of risk. Range Resources Corp is currently generating about 0.42 per unit of volatility. If you would invest  6,600  in Range Resources Corp on September 4, 2024 and sell it today you would earn a total of  500.00  from holding Range Resources Corp or generate 7.58% return on investment over 90 days.

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

Retail Estates NV  vs.  Range Resources Corp

Retail Estates NV

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Retail Estates NV has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Range Resources Corp

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Range Resources Corp are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Range Resources may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Retail Estates and Range Resources

The main advantage of trading using opposite Retail Estates and Range Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Retail Estates 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.

The idea behind Retail Estates NV and Range Resources Corp 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.