Correlation Between Sensient Technologies and Tamboran Resources
Can any of the company-specific risk be diversified away by investing in both Sensient Technologies 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 Sensient Technologies and Tamboran Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sensient Technologies and Tamboran Resources, you can compare the effects of market volatilities on Sensient Technologies 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 Sensient Technologies with a short position of Tamboran Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sensient Technologies and Tamboran Resources.
Diversification Opportunities for Sensient Technologies and Tamboran Resources
-0.13 | Correlation Coefficient |
Good diversification
The 3 months correlation between Sensient and Tamboran is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding Sensient Technologies and Tamboran Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tamboran Resources and Sensient Technologies 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 Sensient Technologies 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 Sensient Technologies i.e., Sensient Technologies and Tamboran Resources go up and down completely randomly.
Pair Corralation between Sensient Technologies and Tamboran Resources
Considering the 90-day investment horizon Sensient Technologies is expected to generate 0.75 times more return on investment than Tamboran Resources. However, Sensient Technologies is 1.34 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 -0.11 per unit of risk. If you would invest 7,878 in Sensient Technologies on August 28, 2024 and sell it today you would earn a total of 42.00 from holding Sensient Technologies or generate 0.53% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Sensient Technologies vs. Tamboran Resources
Performance |
| Timeline |
| Sensient Technologies |
| Tamboran Resources |
Sensient Technologies and Tamboran Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sensient Technologies and Tamboran Resources
The main advantage of trading using opposite Sensient Technologies and Tamboran Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sensient Technologies 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.| Sensient Technologies vs. Oil Dri | Sensient Technologies vs. H B Fuller | Sensient Technologies vs. Northern Technologies | Sensient Technologies vs. Cabot |
| Tamboran Resources vs. SmartStop Self Storage | Tamboran Resources vs. Taiwan Semiconductor Manufacturing | Tamboran Resources vs. Advanced Micro Devices | Tamboran Resources vs. Entegris |
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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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