Correlation Between VOC Energy and Homeland Resources

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

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

Diversification Opportunities for VOC Energy and Homeland Resources

0.64

Correlation Coefficient

VOC Energy  Homeland Resources

Poor diversification

The 3 months correlation between VOC and Homeland is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding VOC Energy Trust and Homeland Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Homeland Resources and VOC Energy 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 VOC Energy 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 VOC Energy i.e., VOC Energy and Homeland Resources go up and down completely randomly.

Pair Corralation between VOC Energy and Homeland Resources

If you would invest  0.03  in Homeland Resources on December 25, 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	Significant
Accuracy	93.65%
Values	Daily Returns

VOC Energy Trust  vs.  Homeland Resources

VOC Energy Trust

Risk-Adjusted Performance

Very Weak

Over the last 90 days VOC Energy Trust has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

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 VOC Energy and Homeland Resources

The main advantage of trading using opposite VOC Energy and Homeland Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if VOC Energy 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 VOC Energy 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.