Correlation Between Tamboran Resources and United Rentals

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

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

Diversification Opportunities for Tamboran Resources and United Rentals

-0.35

Correlation Coefficient

Tamboran Resources  United Rentals

Very good diversification

The 3 months correlation between Tamboran and United is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding Tamboran Resources and United Rentals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on United Rentals 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 United Rentals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of United Rentals has no effect on the direction of Tamboran Resources i.e., Tamboran Resources and United Rentals go up and down completely randomly.

Pair Corralation between Tamboran Resources and United Rentals

Considering the 90-day investment horizon Tamboran Resources is expected to under-perform the United Rentals. In addition to that, Tamboran Resources is 1.19 times more volatile than United Rentals. It trades about -0.08 of its total potential returns per unit of risk. United Rentals is currently generating about 0.05 per unit of volatility. If you would invest  74,057  in United Rentals on September 15, 2024 and sell it today you would earn a total of  3,825  from holding United Rentals or generate 5.16% return on investment over 90 days.

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

Tamboran Resources  vs.  United Rentals

Tamboran Resources

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Tamboran Resources has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest inconsistent performance, the Stock's fundamental drivers remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

United Rentals

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in United Rentals are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong basic indicators, United Rentals is not utilizing all of its potentials. The newest stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Tamboran Resources and United Rentals

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

The idea behind Tamboran Resources and United Rentals 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 Transaction History module to view history of all your transactions and understand their impact on performance.