Correlation Between Talon Metals and Canada Nickel
Can any of the company-specific risk be diversified away by investing in both Talon Metals and Canada Nickel 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 Canada Nickel 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 Canada Nickel, you can compare the effects of market volatilities on Talon Metals and Canada Nickel 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 Canada Nickel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Talon Metals and Canada Nickel.
Diversification Opportunities for Talon Metals and Canada Nickel
0.28 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Talon and Canada is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Talon Metals Corp and Canada Nickel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Canada Nickel 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 Canada Nickel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Canada Nickel has no effect on the direction of Talon Metals i.e., Talon Metals and Canada Nickel go up and down completely randomly.
Pair Corralation between Talon Metals and Canada Nickel
Assuming the 90 days trading horizon Talon Metals Corp is expected to generate 2.1 times more return on investment than Canada Nickel. However, Talon Metals is 2.1 times more volatile than Canada Nickel. It trades about -0.02 of its potential returns per unit of risk. Canada Nickel is currently generating about -0.1 per unit of risk. If you would invest 9.00 in Talon Metals Corp on August 28, 2024 and sell it today you would lose (0.50) from holding Talon Metals Corp or give up 5.56% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Talon Metals Corp vs. Canada Nickel
Performance |
| Timeline |
| Talon Metals Corp |
| Canada Nickel |
Talon Metals and Canada Nickel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Talon Metals and Canada Nickel
The main advantage of trading using opposite Talon Metals and Canada Nickel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Talon Metals position performs unexpectedly, Canada Nickel 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 Canada Nickel will offset losses from the drop in Canada Nickel's long position.| Talon Metals vs. First Majestic Silver | Talon Metals vs. Ivanhoe Energy | Talon Metals vs. Orezone Gold Corp | Talon Metals vs. Faraday Copper Corp |
| Canada Nickel vs. FPX Nickel Corp | Canada Nickel vs. Talon Metals Corp | Canada Nickel vs. Giga Metals Corp | Canada Nickel vs. American Lithium Corp |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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