Correlation Between Range Resources and Brixmor Property

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

Diversification Opportunities for Range Resources and Brixmor Property

0.93

Correlation Coefficient

Range Resources  Brixmor Property

Almost no diversification

The 3 months correlation between Range and Brixmor is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Range Resources Corp and Brixmor Property Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Brixmor Property 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 Brixmor Property. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Brixmor Property has no effect on the direction of Range Resources i.e., Range Resources and Brixmor Property go up and down completely randomly.

Pair Corralation between Range Resources and Brixmor Property

Assuming the 90 days horizon Range Resources Corp is expected to generate 0.78 times more return on investment than Brixmor Property. However, Range Resources Corp is 1.28 times less risky than Brixmor Property. It trades about 0.16 of its potential returns per unit of risk. Brixmor Property Group is currently generating about 0.09 per unit of risk. If you would invest  6,386  in Range Resources Corp on September 23, 2024 and sell it today you would earn a total of  664.00  from holding Range Resources Corp or generate 10.4% return on investment over 90 days.

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

Range Resources Corp  vs.  Brixmor Property Group

Range Resources Corp

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Range Resources Corp are ranked lower than 12 (%) 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.

Brixmor Property

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Brixmor Property Group are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Brixmor Property may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Range Resources and Brixmor Property

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

The idea behind Range Resources Corp and Brixmor Property Group 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.