Correlation Between Talisman Mining and Paladin Energy
Can any of the company-specific risk be diversified away by investing in both Talisman Mining and Paladin Energy 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 Paladin Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Talisman Mining and Paladin Energy, you can compare the effects of market volatilities on Talisman Mining and Paladin Energy 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 Paladin Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Talisman Mining and Paladin Energy.
Diversification Opportunities for Talisman Mining and Paladin Energy
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Talisman and Paladin is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Talisman Mining and Paladin Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Paladin Energy 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 Paladin Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Paladin Energy has no effect on the direction of Talisman Mining i.e., Talisman Mining and Paladin Energy go up and down completely randomly.
Pair Corralation between Talisman Mining and Paladin Energy
Assuming the 90 days trading horizon Talisman Mining is expected to generate 1.5 times more return on investment than Paladin Energy. However, Talisman Mining is 1.5 times more volatile than Paladin Energy. It trades about 0.04 of its potential returns per unit of risk. Paladin Energy is currently generating about 0.02 per unit of risk. If you would invest 14.00 in Talisman Mining on September 4, 2024 and sell it today you would earn a total of 9.00 from holding Talisman Mining or generate 64.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Talisman Mining vs. Paladin Energy
Performance |
| Timeline |
| Talisman Mining |
| Paladin Energy |
Talisman Mining and Paladin Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Talisman Mining and Paladin Energy
The main advantage of trading using opposite Talisman Mining and Paladin Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Talisman Mining position performs unexpectedly, Paladin Energy 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 Paladin Energy will offset losses from the drop in Paladin Energy's long position.| Talisman Mining vs. Northern Star Resources | Talisman Mining vs. Evolution Mining | Talisman Mining vs. Bluescope Steel | Talisman Mining vs. Sandfire Resources NL |
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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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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