Correlation Between MV Oil and CKX Lands
Can any of the company-specific risk be diversified away by investing in both MV Oil and CKX Lands 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 CKX Lands 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 CKX Lands, you can compare the effects of market volatilities on MV Oil and CKX Lands 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 CKX Lands. Check out your portfolio center. Please also check ongoing floating volatility patterns of MV Oil and CKX Lands.
Diversification Opportunities for MV Oil and CKX Lands
Very weak diversification
The 3 months correlation between MVO and CKX is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding MV Oil Trust and CKX Lands in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CKX Lands 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 CKX Lands. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CKX Lands has no effect on the direction of MV Oil i.e., MV Oil and CKX Lands go up and down completely randomly.
Pair Corralation between MV Oil and CKX Lands
Considering the 90-day investment horizon MV Oil Trust is expected to under-perform the CKX Lands. But the stock apears to be less risky and, when comparing its historical volatility, MV Oil Trust is 18.96 times less risky than CKX Lands. The stock trades about -0.05 of its potential returns per unit of risk. The CKX Lands is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 982.00 in CKX Lands on November 2, 2024 and sell it today you would earn a total of 172.00 from holding CKX Lands or generate 17.52% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.75% |
| Values | Daily Returns |
MV Oil Trust vs. CKX Lands
Performance |
| Timeline |
| MV Oil Trust |
| CKX Lands |
MV Oil and CKX Lands Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MV Oil and CKX Lands
The main advantage of trading using opposite MV Oil and CKX Lands positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MV Oil position performs unexpectedly, CKX Lands 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 CKX Lands will offset losses from the drop in CKX Lands' long position.| MV Oil vs. North European Oil | MV Oil vs. Permianville Royalty Trust | MV Oil vs. Cross Timbers Royalty | MV Oil vs. Mesa Royalty Trust |
| CKX Lands vs. PrimeEnergy | CKX Lands vs. MorningStar Partners, LP | CKX Lands vs. XXL Energy Corp | CKX Lands vs. Magnolia Oil Gas |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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