Correlation Between MV Oil and Homeland Resources

Can any of the company-specific risk be diversified away by investing in both MV Oil and Homeland 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 Homeland 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 Homeland Resources, you can compare the effects of market volatilities on MV Oil and Homeland 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 Homeland Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of MV Oil and Homeland Resources.

Diversification Opportunities for MV Oil and Homeland Resources

0.45

Correlation Coefficient

MV Oil  Homeland Resources

Very weak diversification

The 3 months correlation between MVO and Homeland is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding MV Oil Trust and Homeland Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Homeland 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 Homeland Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Homeland Resources has no effect on the direction of MV Oil i.e., MV Oil and Homeland Resources go up and down completely randomly.

Pair Corralation between MV Oil and Homeland Resources

If you would invest  0.03  in Homeland Resources on December 27, 2024 and sell it today you would lose (0.02) from holding Homeland Resources or give up 66.67% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	95.24%
Values	Daily Returns

MV Oil Trust  vs.  Homeland 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.

Homeland Resources

Risk-Adjusted Performance

Very Weak

Over the last 90 days Homeland Resources has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong essential indicators, Homeland Resources is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with MV Oil and Homeland Resources

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

The idea behind MV Oil Trust and Homeland 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.