Correlation Between Talon Metals and Air Canada
Can any of the company-specific risk be diversified away by investing in both Talon Metals and Air Canada 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 Talon Metals and Air Canada into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Talon Metals Corp and Air Canada, you can compare the effects of market volatilities on Talon Metals and Air Canada 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 Talon Metals with a short position of Air Canada. Check out your portfolio center. Please also check ongoing floating volatility patterns of Talon Metals and Air Canada.
Diversification Opportunities for Talon Metals and Air Canada
-0.49 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Talon and Air is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding Talon Metals Corp and Air Canada in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Air Canada and Talon Metals 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 Talon Metals Corp are associated (or correlated) with Air Canada. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Air Canada has no effect on the direction of Talon Metals i.e., Talon Metals and Air Canada go up and down completely randomly.
Pair Corralation between Talon Metals and Air Canada
Assuming the 90 days trading horizon Talon Metals Corp is expected to under-perform the Air Canada. In addition to that, Talon Metals is 2.2 times more volatile than Air Canada. It trades about -0.06 of its total potential returns per unit of risk. Air Canada is currently generating about 0.04 per unit of volatility. If you would invest 1,897 in Air Canada on September 3, 2024 and sell it today you would earn a total of 599.00 from holding Air Canada or generate 31.58% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Talon Metals Corp vs. Air Canada
Performance |
| Timeline |
| Talon Metals Corp |
| Air Canada |
Talon Metals and Air Canada Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Talon Metals and Air Canada
The main advantage of trading using opposite Talon Metals and Air Canada positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Talon Metals position performs unexpectedly, Air Canada 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 Air Canada will offset losses from the drop in Air Canada's long position.| Talon Metals vs. Algoma Steel Group | Talon Metals vs. Champion Iron | Talon Metals vs. International Zeolite Corp | Talon Metals vs. European Residential Real |
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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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