Correlation Between MV Oil and United Amern

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

Diversification Opportunities for MV Oil and United Amern

-0.32

Correlation Coefficient

MV Oil  United Amern

Very good diversification

The 3 months correlation between MVO and United is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding MV Oil Trust and United Amern Pete in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on United Amern Pete 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 United Amern. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of United Amern Pete has no effect on the direction of MV Oil i.e., MV Oil and United Amern go up and down completely randomly.

Pair Corralation between MV Oil and United Amern

Considering the 90-day investment horizon MV Oil Trust is expected to under-perform the United Amern. But the stock apears to be less risky and, when comparing its historical volatility, MV Oil Trust is 8.12 times less risky than United Amern. The stock trades about -0.08 of its potential returns per unit of risk. The United Amern Pete is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  0.08  in United Amern Pete on December 27, 2024 and sell it today you would earn a total of  0.00  from holding United Amern Pete or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.36%
Values	Daily Returns

MV Oil Trust  vs.  United Amern Pete

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.

United Amern Pete

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in United Amern Pete are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak basic indicators, United Amern exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with MV Oil and United Amern

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

The idea behind MV Oil Trust and United Amern Pete 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.

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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.