Correlation Between Expand Energy and Tamboran Resources

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

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

Diversification Opportunities for Expand Energy and Tamboran Resources

0.76

Correlation Coefficient

Expand Energy  Tamboran Resources

Poor diversification

The 3 months correlation between Expand and Tamboran is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Expand Energy and Tamboran Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tamboran Resources and Expand Energy 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 Expand Energy are associated (or correlated) with Tamboran Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tamboran Resources has no effect on the direction of Expand Energy i.e., Expand Energy and Tamboran Resources go up and down completely randomly.

Pair Corralation between Expand Energy and Tamboran Resources

Considering the 90-day investment horizon Expand Energy is expected to generate 28.15 times less return on investment than Tamboran Resources. But when comparing it to its historical volatility, Expand Energy is 3.12 times less risky than Tamboran Resources. It trades about 0.02 of its potential returns per unit of risk. Tamboran Resources is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest  1,737  in Tamboran Resources on December 3, 2024 and sell it today you would earn a total of  789.00  from holding Tamboran Resources or generate 45.42% return on investment over 90 days.

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

Expand Energy  vs.  Tamboran Resources

Expand Energy

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Expand Energy are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, Expand Energy is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Tamboran Resources

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Tamboran Resources are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of very weak fundamental drivers, Tamboran Resources displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Expand Energy and Tamboran Resources

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

The idea behind Expand Energy and Tamboran Resources 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..