Correlation Between Talisman Mining and GreenX Metals
Can any of the company-specific risk be diversified away by investing in both Talisman Mining and GreenX Metals 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 Talisman Mining and GreenX Metals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Talisman Mining and GreenX Metals, you can compare the effects of market volatilities on Talisman Mining and GreenX Metals 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 Talisman Mining with a short position of GreenX Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Talisman Mining and GreenX Metals.
Diversification Opportunities for Talisman Mining and GreenX Metals
0.4 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Talisman and GreenX is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Talisman Mining and GreenX Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GreenX Metals and Talisman Mining 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 Talisman Mining are associated (or correlated) with GreenX Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GreenX Metals has no effect on the direction of Talisman Mining i.e., Talisman Mining and GreenX Metals go up and down completely randomly.
Pair Corralation between Talisman Mining and GreenX Metals
Assuming the 90 days trading horizon Talisman Mining is expected to generate 1.5 times more return on investment than GreenX Metals. However, Talisman Mining is 1.5 times more volatile than GreenX Metals. It trades about -0.12 of its potential returns per unit of risk. GreenX Metals is currently generating about -0.35 per unit of risk. If you would invest 24.00 in Talisman Mining on August 25, 2024 and sell it today you would lose (3.00) from holding Talisman Mining or give up 12.5% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Talisman Mining vs. GreenX Metals
Performance |
| Timeline |
| Talisman Mining |
| GreenX Metals |
Talisman Mining and GreenX Metals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Talisman Mining and GreenX Metals
The main advantage of trading using opposite Talisman Mining and GreenX Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Talisman Mining position performs unexpectedly, GreenX Metals 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 GreenX Metals will offset losses from the drop in GreenX Metals' long position.| Talisman Mining vs. Northern Star Resources | Talisman Mining vs. Evolution Mining | Talisman Mining vs. Bluescope Steel | Talisman Mining vs. Sandfire Resources NL |
| GreenX Metals vs. Northern Star Resources | GreenX Metals vs. Evolution Mining | GreenX Metals vs. Bluescope Steel | GreenX Metals vs. Sandfire Resources NL |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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