Correlation Between CVB Financial and Range Resources

Can any of the company-specific risk be diversified away by investing in both CVB Financial 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 CVB Financial and Range Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between CVB Financial Corp and Range Resources Corp, you can compare the effects of market volatilities on CVB Financial 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 CVB Financial with a short position of Range Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of CVB Financial and Range Resources.

Diversification Opportunities for CVB Financial and Range Resources

0.95

Correlation Coefficient

CVB Financial  Range Resources

Almost no diversification

The 3 months correlation between CVB and Range is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding CVB Financial 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 CVB Financial 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 CVB Financial Corp 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 CVB Financial i.e., CVB Financial and Range Resources go up and down completely randomly.

Pair Corralation between CVB Financial and Range Resources

Assuming the 90 days horizon CVB Financial Corp is expected to generate 4.16 times more return on investment than Range Resources. However, CVB Financial is 4.16 times more volatile than Range Resources Corp. It trades about 0.11 of its potential returns per unit of risk. Range Resources Corp is currently generating about 0.17 per unit of risk. If you would invest  1,773  in CVB Financial Corp on October 7, 2024 and sell it today you would earn a total of  247.00  from holding CVB Financial Corp or generate 13.93% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	100.0%
Values	Daily Returns

CVB Financial Corp  vs.  Range Resources Corp

CVB Financial Corp

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in CVB Financial Corp are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, CVB Financial reported solid returns over the last few months and may actually be approaching a breakup point.

Range Resources Corp

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Range Resources Corp are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, Range Resources may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with CVB Financial and Range Resources

The main advantage of trading using opposite CVB Financial and Range Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CVB Financial 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 CVB Financial Corp 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.

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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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.