Correlation Between Range Resources and Gran Tierra
Can any of the company-specific risk be diversified away by investing in both Range Resources and Gran Tierra 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 Gran Tierra 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 Gran Tierra Energy, you can compare the effects of market volatilities on Range Resources and Gran Tierra 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 Gran Tierra. Check out your portfolio center. Please also check ongoing floating volatility patterns of Range Resources and Gran Tierra.
Diversification Opportunities for Range Resources and Gran Tierra
-0.15 | Correlation Coefficient |
Good diversification
The 3 months correlation between Range and Gran is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding Range Resources Corp and Gran Tierra Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gran Tierra 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 Gran Tierra. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gran Tierra Energy has no effect on the direction of Range Resources i.e., Range Resources and Gran Tierra go up and down completely randomly.
Pair Corralation between Range Resources and Gran Tierra
Considering the 90-day investment horizon Range Resources Corp is expected to generate 0.64 times more return on investment than Gran Tierra. However, Range Resources Corp is 1.56 times less risky than Gran Tierra. It trades about 0.26 of its potential returns per unit of risk. Gran Tierra Energy is currently generating about 0.13 per unit of risk. If you would invest 3,149 in Range Resources Corp on August 31, 2024 and sell it today you would earn a total of 425.00 from holding Range Resources Corp or generate 13.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Range Resources Corp vs. Gran Tierra Energy
Performance |
| Timeline |
| Range Resources Corp |
| Gran Tierra Energy |
Range Resources and Gran Tierra Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Range Resources and Gran Tierra
The main advantage of trading using opposite Range Resources and Gran Tierra positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Range Resources position performs unexpectedly, Gran Tierra 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 Gran Tierra will offset losses from the drop in Gran Tierra's long position.| Range Resources vs. Antero Resources Corp | Range Resources vs. EQT Corporation | Range Resources vs. Comstock Resources | Range Resources vs. Permian Resources |
| Gran Tierra vs. Permian Resources | Gran Tierra vs. PEDEVCO Corp | Gran Tierra vs. Vermilion Energy | Gran Tierra vs. Ovintiv |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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