Correlation Between Range Resources and Southwestern Energy

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

Diversification Opportunities for Range Resources and Southwestern Energy

0.0

Correlation Coefficient

Range Resources  Southwestern Energy

Pay attention - limited upside

The 3 months correlation between Range and Southwestern is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Range Resources Corp and Southwestern Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Southwestern 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 Southwestern Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Southwestern Energy has no effect on the direction of Range Resources i.e., Range Resources and Southwestern Energy go up and down completely randomly.

Pair Corralation between Range Resources and Southwestern Energy

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	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Range Resources Corp  vs.  Southwestern Energy

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.

Southwestern Energy

Risk-Adjusted Performance

Very Weak

Over the last 90 days Southwestern Energy has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Southwestern Energy is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Range Resources and Southwestern Energy

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

The idea behind Range Resources Corp and Southwestern Energy 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.