Correlation Between Granite Ridge and Tamboran Resources

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

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

Diversification Opportunities for Granite Ridge and Tamboran Resources

-0.07

Correlation Coefficient

Granite Ridge  Tamboran Resources

Good diversification

The 3 months correlation between Granite and Tamboran is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding Granite Ridge Resources and Tamboran Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tamboran Resources and Granite Ridge 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 Granite Ridge Resources 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 Granite Ridge i.e., Granite Ridge and Tamboran Resources go up and down completely randomly.

Pair Corralation between Granite Ridge and Tamboran Resources

Given the investment horizon of 90 days Granite Ridge is expected to generate 8.75 times less return on investment than Tamboran Resources. But when comparing it to its historical volatility, Granite Ridge Resources is 2.36 times less risky than Tamboran Resources. It trades about 0.03 of its potential returns per unit of risk. Tamboran Resources is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  1,860  in Tamboran Resources on December 29, 2024 and sell it today you would earn a total of  567.00  from holding Tamboran Resources or generate 30.48% return on investment over 90 days.

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

Granite Ridge Resources  vs.  Tamboran Resources

Granite Ridge Resources

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Granite Ridge Resources are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Granite Ridge is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

Tamboran Resources

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Tamboran Resources are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating fundamental drivers, Tamboran Resources displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Granite Ridge and Tamboran Resources

The main advantage of trading using opposite Granite Ridge and Tamboran Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Granite Ridge 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 Granite Ridge Resources 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.