Correlation Between Talon Metals and Western Investment
Can any of the company-specific risk be diversified away by investing in both Talon Metals and Western Investment 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 Western Investment 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 Western Investment, you can compare the effects of market volatilities on Talon Metals and Western Investment 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 Western Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Talon Metals and Western Investment.
Diversification Opportunities for Talon Metals and Western Investment
0.33 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Talon and Western is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Talon Metals Corp and Western Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Western Investment 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 Western Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Western Investment has no effect on the direction of Talon Metals i.e., Talon Metals and Western Investment go up and down completely randomly.
Pair Corralation between Talon Metals and Western Investment
Assuming the 90 days trading horizon Talon Metals Corp is expected to under-perform the Western Investment. In addition to that, Talon Metals is 1.26 times more volatile than Western Investment. It trades about -0.05 of its total potential returns per unit of risk. Western Investment is currently generating about 0.03 per unit of volatility. If you would invest 39.00 in Western Investment on September 12, 2024 and sell it today you would earn a total of 7.00 from holding Western Investment or generate 17.95% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Talon Metals Corp vs. Western Investment
Performance |
| Timeline |
| Talon Metals Corp |
| Western Investment |
Talon Metals and Western Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Talon Metals and Western Investment
The main advantage of trading using opposite Talon Metals and Western Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Talon Metals position performs unexpectedly, Western Investment 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 Western Investment will offset losses from the drop in Western Investment's long position.| Talon Metals vs. Ressources Minieres Radisson | Talon Metals vs. Galantas Gold Corp | Talon Metals vs. Red Pine Exploration | Talon Metals vs. Kore Mining |
| Western Investment vs. Brompton Lifeco Split | Western Investment vs. North American Financial | Western Investment vs. Prime Dividend Corp | Western Investment vs. Financial 15 Split |
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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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