Correlation Between APA and Range Resources
Can any of the company-specific risk be diversified away by investing in both APA 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 APA and Range Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between APA Corporation and Range Resources Corp, you can compare the effects of market volatilities on APA 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 APA with a short position of Range Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of APA and Range Resources.
Diversification Opportunities for APA and Range Resources
-0.51 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between APA and Range is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding APA Corp. 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 APA 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 APA Corporation 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 APA i.e., APA and Range Resources go up and down completely randomly.
Pair Corralation between APA and Range Resources
Considering the 90-day investment horizon APA Corporation is expected to under-perform the Range Resources. In addition to that, APA is 1.01 times more volatile than Range Resources Corp. It trades about -0.04 of its total potential returns per unit of risk. Range Resources Corp is currently generating about 0.04 per unit of volatility. If you would invest 2,468 in Range Resources Corp on August 30, 2024 and sell it today you would earn a total of 1,091 from holding Range Resources Corp or generate 44.21% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
APA Corp. vs. Range Resources Corp
Performance |
| Timeline |
| APA Corporation |
| Range Resources Corp |
APA and Range Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with APA and Range Resources
The main advantage of trading using opposite APA and Range Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if APA 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 APA Corporation 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.| Range Resources vs. Antero Resources Corp | Range Resources vs. EQT Corporation | Range Resources vs. Comstock Resources | Range Resources vs. Permian Resources |
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 Stocks Directory module to find actively traded stocks across global markets.
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