Correlation Between Air Canada and Range Resources

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

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

Diversification Opportunities for Air Canada and Range Resources

-0.56

Correlation Coefficient

Air Canada  Range Resources

Excellent diversification

The 3 months correlation between Air and Range is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding Air Canada 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 Air Canada 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 Air Canada 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 Air Canada i.e., Air Canada and Range Resources go up and down completely randomly.

Pair Corralation between Air Canada and Range Resources

Assuming the 90 days trading horizon Air Canada is expected to generate 2.91 times more return on investment than Range Resources. However, Air Canada is 2.91 times more volatile than Range Resources Corp. It trades about 0.21 of its potential returns per unit of risk. Range Resources Corp is currently generating about -0.07 per unit of risk. If you would invest  890.00  in Air Canada on April 23, 2025 and sell it today you would earn a total of  441.00  from holding Air Canada or generate 49.55% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.44%
Values	Daily Returns

Air Canada  vs.  Range Resources Corp

Air Canada

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Air Canada are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, Air Canada unveiled solid returns over the last few months and may actually be approaching a breakup point.

Range Resources Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days Range Resources Corp has generated negative risk-adjusted returns adding no value to investors with long positions. 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.

Pair Trading with Air Canada and Range Resources

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

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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.