Correlation Between Defiance Silver and Talon Metals

Can any of the company-specific risk be diversified away by investing in both Defiance Silver and Talon 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 Defiance Silver and Talon Metals into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Defiance Silver Corp and Talon Metals Corp, you can compare the effects of market volatilities on Defiance Silver and Talon 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 Defiance Silver with a short position of Talon Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Defiance Silver and Talon Metals.

Diversification Opportunities for Defiance Silver and Talon Metals

0.22

Correlation Coefficient

Defiance Silver  Talon Metals

Modest diversification

The 3 months correlation between Defiance and Talon is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Defiance Silver Corp and Talon Metals Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Talon Metals Corp and Defiance Silver 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 Defiance Silver Corp are associated (or correlated) with Talon Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Talon Metals Corp has no effect on the direction of Defiance Silver i.e., Defiance Silver and Talon Metals go up and down completely randomly.

Pair Corralation between Defiance Silver and Talon Metals

Assuming the 90 days horizon Defiance Silver is expected to generate 2.37 times less return on investment than Talon Metals. In addition to that, Defiance Silver is 2.11 times more volatile than Talon Metals Corp. It trades about 0.0 of its total potential returns per unit of risk. Talon Metals Corp is currently generating about 0.02 per unit of volatility. If you would invest  9.00  in Talon Metals Corp on October 4, 2024 and sell it today you would earn a total of  0.00  from holding Talon Metals Corp or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Defiance Silver Corp  vs.  Talon Metals Corp

Defiance Silver Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Defiance Silver Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Defiance Silver is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Talon Metals Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Talon Metals Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in February 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Defiance Silver and Talon Metals

The main advantage of trading using opposite Defiance Silver and Talon Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Defiance Silver position performs unexpectedly, Talon 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 Talon Metals will offset losses from the drop in Talon Metals' long position.

The idea behind Defiance Silver Corp and Talon Metals Corp pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..