Correlation Between Range Resources and CGX Energy
Can any of the company-specific risk be diversified away by investing in both Range Resources and CGX Energy 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 CGX Energy 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 CGX Energy, you can compare the effects of market volatilities on Range Resources and CGX Energy 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 CGX Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Range Resources and CGX Energy.
Diversification Opportunities for Range Resources and CGX Energy
0.59 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Range and CGX is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Range Resources Corp and CGX Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CGX Energy 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 CGX Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CGX Energy has no effect on the direction of Range Resources i.e., Range Resources and CGX Energy go up and down completely randomly.
Pair Corralation between Range Resources and CGX Energy
Considering the 90-day investment horizon Range Resources Corp is expected to generate 0.4 times more return on investment than CGX Energy. However, Range Resources Corp is 2.52 times less risky than CGX Energy. It trades about 0.04 of its potential returns per unit of risk. CGX Energy is currently generating about -0.03 per unit of risk. 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 Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Range Resources Corp vs. CGX Energy
Performance |
| Timeline |
| Range Resources Corp |
| CGX Energy |
Range Resources and CGX Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Range Resources and CGX Energy
The main advantage of trading using opposite Range Resources and CGX Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Range Resources position performs unexpectedly, CGX Energy 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 CGX Energy will offset losses from the drop in CGX Energy's long position.| Range Resources vs. Antero Resources Corp | Range Resources vs. EQT Corporation | Range Resources vs. Comstock Resources | Range Resources vs. Permian Resources |
| CGX Energy vs. Yamaha Motor Co | CGX Energy vs. Nitto Denko Corp | CGX Energy vs. Farmers Merchants Bancorp | CGX Energy vs. Furukawa Electric Co |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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