Correlation Between Mayfair Gold and Talon 1

Can any of the company-specific risk be diversified away by investing in both Mayfair Gold and Talon 1 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 Mayfair Gold and Talon 1 into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Mayfair Gold Corp and Talon 1 Acquisition, you can compare the effects of market volatilities on Mayfair Gold and Talon 1 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 Mayfair Gold with a short position of Talon 1. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mayfair Gold and Talon 1.

Diversification Opportunities for Mayfair Gold and Talon 1

0.65

Correlation Coefficient

Mayfair Gold  Talon 1

Poor diversification

The 3 months correlation between Mayfair and Talon is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Mayfair Gold Corp and Talon 1 Acquisition in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Talon 1 Acquisition and Mayfair Gold 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 Mayfair Gold Corp are associated (or correlated) with Talon 1. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Talon 1 Acquisition has no effect on the direction of Mayfair Gold i.e., Mayfair Gold and Talon 1 go up and down completely randomly.

Pair Corralation between Mayfair Gold and Talon 1

Assuming the 90 days horizon Mayfair Gold is expected to generate 39.48 times less return on investment than Talon 1. But when comparing it to its historical volatility, Mayfair Gold Corp is 12.8 times less risky than Talon 1. It trades about 0.03 of its potential returns per unit of risk. Talon 1 Acquisition is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  1.02  in Talon 1 Acquisition on September 15, 2024 and sell it today you would lose (0.81) from holding Talon 1 Acquisition or give up 79.41% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	13.13%
Values	Daily Returns

Mayfair Gold Corp  vs.  Talon 1 Acquisition

Mayfair Gold Corp

Risk-Adjusted Performance

0 of 100

Weak

Over the last 90 days Mayfair Gold Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable fundamental indicators, Mayfair Gold is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Talon 1 Acquisition

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Talon 1 Acquisition has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable fundamental indicators, Talon 1 is not utilizing all of its potentials. The newest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Mayfair Gold and Talon 1

The main advantage of trading using opposite Mayfair Gold and Talon 1 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mayfair Gold position performs unexpectedly, Talon 1 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 1 will offset losses from the drop in Talon 1's long position.

The idea behind Mayfair Gold Corp and Talon 1 Acquisition 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.