Correlation Between MV Oil and Comstock Resources

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

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

Diversification Opportunities for MV Oil and Comstock Resources

0.08

Correlation Coefficient

MV Oil  Comstock Resources

Significant diversification

The 3 months correlation between MVO and Comstock is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding MV Oil Trust and Comstock Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Comstock Resources and MV Oil 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 MV Oil Trust are associated (or correlated) with Comstock Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Comstock Resources has no effect on the direction of MV Oil i.e., MV Oil and Comstock Resources go up and down completely randomly.

Pair Corralation between MV Oil and Comstock Resources

Considering the 90-day investment horizon MV Oil Trust is expected to under-perform the Comstock Resources. In addition to that, MV Oil is 1.19 times more volatile than Comstock Resources. It trades about -0.07 of its total potential returns per unit of risk. Comstock Resources is currently generating about 0.04 per unit of volatility. If you would invest  1,892  in Comstock Resources on December 28, 2024 and sell it today you would earn a total of  100.00  from holding Comstock Resources or generate 5.29% return on investment over 90 days.

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

MV Oil Trust  vs.  Comstock Resources

MV Oil Trust

Risk-Adjusted Performance

Very Weak

Over the last 90 days MV Oil Trust has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Comstock Resources

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Comstock Resources are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite quite unsteady basic indicators, Comstock Resources may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with MV Oil and Comstock Resources

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

The idea behind MV Oil Trust and Comstock 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.