Correlation Between Occidental Petroleum and Range Resources
Can any of the company-specific risk be diversified away by investing in both Occidental Petroleum 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 Occidental Petroleum and Range Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Occidental Petroleum and Range Resources Corp, you can compare the effects of market volatilities on Occidental Petroleum 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 Occidental Petroleum with a short position of Range Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Occidental Petroleum and Range Resources.
Diversification Opportunities for Occidental Petroleum and Range Resources
-0.22 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Occidental and Range is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding Occidental Petroleum 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 Occidental Petroleum 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 Occidental Petroleum 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 Occidental Petroleum i.e., Occidental Petroleum and Range Resources go up and down completely randomly.
Pair Corralation between Occidental Petroleum and Range Resources
Considering the 90-day investment horizon Occidental Petroleum is expected to generate 5.55 times less return on investment than Range Resources. But when comparing it to its historical volatility, Occidental Petroleum is 1.97 times less risky than Range Resources. It trades about 0.11 of its potential returns per unit of risk. Range Resources Corp is currently generating about 0.31 of returns per unit of risk over similar time horizon. If you would invest 3,098 in Range Resources Corp on August 27, 2024 and sell it today you would earn a total of 474.00 from holding Range Resources Corp or generate 15.3% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Occidental Petroleum vs. Range Resources Corp
Performance |
| Timeline |
| Occidental Petroleum |
| Range Resources Corp |
Occidental Petroleum and Range Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Occidental Petroleum and Range Resources
The main advantage of trading using opposite Occidental Petroleum and Range Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Occidental Petroleum 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.| Occidental Petroleum vs. Sabine Royalty Trust | Occidental Petroleum vs. Cross Timbers Royalty | Occidental Petroleum vs. MV Oil Trust | Occidental Petroleum vs. San Juan Basin |
| 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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