Correlation Between Ranger Energy and Emerald Expositions

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

By analyzing existing cross correlation between Ranger Energy Services and Emerald Expositions Events, you can compare the effects of market volatilities on Ranger Energy and Emerald Expositions 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 Ranger Energy with a short position of Emerald Expositions. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ranger Energy and Emerald Expositions.

Diversification Opportunities for Ranger Energy and Emerald Expositions

0.61

Correlation Coefficient

Ranger Energy  Emerald Expositions

Poor diversification

The 3 months correlation between Ranger and Emerald is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Ranger Energy Services and Emerald Expositions Events in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Emerald Expositions and Ranger Energy 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 Ranger Energy Services are associated (or correlated) with Emerald Expositions. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Emerald Expositions has no effect on the direction of Ranger Energy i.e., Ranger Energy and Emerald Expositions go up and down completely randomly.

Pair Corralation between Ranger Energy and Emerald Expositions

Given the investment horizon of 90 days Ranger Energy Services is expected to under-perform the Emerald Expositions. In addition to that, Ranger Energy is 1.2 times more volatile than Emerald Expositions Events. It trades about -0.44 of its total potential returns per unit of risk. Emerald Expositions Events is currently generating about -0.05 per unit of volatility. If you would invest  488.00  in Emerald Expositions Events on September 24, 2024 and sell it today you would lose (9.00) from holding Emerald Expositions Events or give up 1.84% of portfolio value over 90 days.

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

Ranger Energy Services  vs.  Emerald Expositions Events

Ranger Energy Services

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Ranger Energy Services are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Even with relatively inconsistent technical and fundamental indicators, Ranger Energy reported solid returns over the last few months and may actually be approaching a breakup point.

Emerald Expositions

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Emerald Expositions Events are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating technical and fundamental indicators, Emerald Expositions may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Ranger Energy and Emerald Expositions

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

The idea behind Ranger Energy Services and Emerald Expositions Events 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.

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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.