Correlation Between MV Oil and Tamboran Resources

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

Diversification Opportunities for MV Oil and Tamboran Resources

0.59

Correlation Coefficient

MV Oil  Tamboran Resources

Very weak diversification

The 3 months correlation between MVO and Tamboran is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding MV Oil Trust and Tamboran Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tamboran 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 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 MV Oil i.e., MV Oil and Tamboran Resources go up and down completely randomly.

Pair Corralation between MV Oil and Tamboran Resources

Considering the 90-day investment horizon MV Oil Trust is expected to generate 0.61 times more return on investment than Tamboran Resources. However, MV Oil Trust is 1.65 times less risky than Tamboran Resources. It trades about 0.0 of its potential returns per unit of risk. Tamboran Resources is currently generating about -0.06 per unit of risk. If you would invest  853.00  in MV Oil Trust on September 19, 2024 and sell it today you would lose (23.00) from holding MV Oil Trust or give up 2.7% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	96.03%
Values	Daily Returns

MV Oil Trust  vs.  Tamboran Resources

MV Oil Trust

Risk-Adjusted Performance

0 of 100

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 latest unsteady performance, the Stock's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

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 weak performance in the last few months, the Stock's fundamental drivers remain very healthy which may send shares a bit higher in January 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with MV Oil and Tamboran Resources

The main advantage of trading using opposite MV Oil and Tamboran Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MV Oil 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.

The idea behind MV Oil Trust and Tamboran 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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.