Correlation Between Range Resources and PEDEVCO Corp

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

Diversification Opportunities for Range Resources and PEDEVCO Corp

-0.63

Correlation Coefficient

Range Resources  PEDEVCO Corp

Excellent diversification

The 3 months correlation between Range and PEDEVCO is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding Range Resources Corp and PEDEVCO Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PEDEVCO Corp 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 PEDEVCO Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PEDEVCO Corp has no effect on the direction of Range Resources i.e., Range Resources and PEDEVCO Corp go up and down completely randomly.

Pair Corralation between Range Resources and PEDEVCO Corp

Considering the 90-day investment horizon Range Resources Corp is expected to generate 0.84 times more return on investment than PEDEVCO Corp. However, Range Resources Corp is 1.18 times less risky than PEDEVCO Corp. It trades about 0.17 of its potential returns per unit of risk. PEDEVCO Corp is currently generating about -0.14 per unit of risk. If you would invest  2,952  in Range Resources Corp on September 14, 2024 and sell it today you would earn a total of  655.00  from holding Range Resources Corp or generate 22.19% return on investment over 90 days.

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

Range Resources Corp  vs.  PEDEVCO Corp

Range Resources Corp

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Range Resources Corp are ranked lower than 13 (%) 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.

PEDEVCO Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days PEDEVCO Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's technical and fundamental indicators remain rather sound which may send shares a bit higher in January 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Range Resources and PEDEVCO Corp

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

The idea behind Range Resources Corp and PEDEVCO 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.