Correlation Between Range Resources and ConocoPhillips

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

Diversification Opportunities for Range Resources and ConocoPhillips

0.66

Correlation Coefficient

Range Resources  ConocoPhillips

Poor diversification

The 3 months correlation between Range and ConocoPhillips is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Range Resources Corp and ConocoPhillips in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ConocoPhillips 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 ConocoPhillips. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ConocoPhillips has no effect on the direction of Range Resources i.e., Range Resources and ConocoPhillips go up and down completely randomly.

Pair Corralation between Range Resources and ConocoPhillips

Considering the 90-day investment horizon Range Resources Corp is expected to generate 1.3 times more return on investment than ConocoPhillips. However, Range Resources is 1.3 times more volatile than ConocoPhillips. It trades about 0.06 of its potential returns per unit of risk. ConocoPhillips is currently generating about 0.06 per unit of risk. If you would invest  3,632  in Range Resources Corp on December 30, 2024 and sell it today you would earn a total of  287.00  from holding Range Resources Corp or generate 7.9% return on investment over 90 days.

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

Range Resources Corp  vs.  ConocoPhillips

Range Resources Corp

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Range Resources Corp are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, Range Resources may actually be approaching a critical reversion point that can send shares even higher in April 2025.

ConocoPhillips

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in ConocoPhillips are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Even with relatively fragile basic indicators, ConocoPhillips may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Range Resources and ConocoPhillips

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

The idea behind Range Resources Corp and ConocoPhillips 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.

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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.