Correlation Between Range Resources and Macerich

Can any of the company-specific risk be diversified away by investing in both Range Resources and Macerich 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 Macerich 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 The Macerich, you can compare the effects of market volatilities on Range Resources and Macerich 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 Macerich. Check out your portfolio center. Please also check ongoing floating volatility patterns of Range Resources and Macerich.

Diversification Opportunities for Range Resources and Macerich

0.89

Correlation Coefficient

Range Resources  Macerich

Very poor diversification

The 3 months correlation between Range and Macerich is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Range Resources Corp and The Macerich in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Macerich 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 Macerich. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Macerich has no effect on the direction of Range Resources i.e., Range Resources and Macerich go up and down completely randomly.

Pair Corralation between Range Resources and Macerich

Assuming the 90 days horizon Range Resources Corp is expected to under-perform the Macerich. But the stock apears to be less risky and, when comparing its historical volatility, Range Resources Corp is 1.51 times less risky than Macerich. The stock trades about -0.32 of its potential returns per unit of risk. The The Macerich is currently generating about -0.14 of returns per unit of risk over similar time horizon. If you would invest  2,023  in The Macerich on October 15, 2024 and sell it today you would lose (88.00) from holding The Macerich or give up 4.35% of portfolio value over 90 days.

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

Range Resources Corp  vs.  The Macerich

Range Resources Corp

Risk-Adjusted Performance

4 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Range Resources Corp are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Range Resources is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Macerich

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in The Macerich are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Macerich reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Range Resources and Macerich

The main advantage of trading using opposite Range Resources and Macerich positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Range Resources position performs unexpectedly, Macerich 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 Macerich will offset losses from the drop in Macerich's long position.

The idea behind Range Resources Corp and The Macerich 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.