Correlation Between Tamboran Resources and Boston Beer

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

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

Diversification Opportunities for Tamboran Resources and Boston Beer

-0.6

Correlation Coefficient

Tamboran Resources  Boston Beer

Excellent diversification

The 3 months correlation between Tamboran and Boston is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding Tamboran Resources and Boston Beer in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Boston Beer and Tamboran 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 Tamboran Resources are associated (or correlated) with Boston Beer. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Boston Beer has no effect on the direction of Tamboran Resources i.e., Tamboran Resources and Boston Beer go up and down completely randomly.

Pair Corralation between Tamboran Resources and Boston Beer

Considering the 90-day investment horizon Tamboran Resources is expected to generate 2.37 times more return on investment than Boston Beer. However, Tamboran Resources is 2.37 times more volatile than Boston Beer. It trades about 0.42 of its potential returns per unit of risk. Boston Beer is currently generating about -0.48 per unit of risk. If you would invest  1,643  in Tamboran Resources on October 10, 2024 and sell it today you would earn a total of  594.00  from holding Tamboran Resources or generate 36.15% return on investment over 90 days.

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

Tamboran Resources  vs.  Boston Beer

Tamboran Resources

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Tamboran Resources are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of very conflicting fundamental drivers, Tamboran Resources displayed solid returns over the last few months and may actually be approaching a breakup point.

Boston Beer

Risk-Adjusted Performance

0 of 100

Weak

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

Pair Trading with Tamboran Resources and Boston Beer

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

The idea behind Tamboran Resources and Boston Beer 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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.