Correlation Between Talon Metals and Canadian General

Can any of the company-specific risk be diversified away by investing in both Talon Metals and Canadian General 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 Canadian General 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 Canadian General Investments, you can compare the effects of market volatilities on Talon Metals and Canadian General 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 Canadian General. Check out your portfolio center. Please also check ongoing floating volatility patterns of Talon Metals and Canadian General.

Diversification Opportunities for Talon Metals and Canadian General

-0.08

Correlation Coefficient

Talon Metals  Canadian General

Good diversification

The 3 months correlation between Talon and Canadian is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding Talon Metals Corp and Canadian General Investments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Canadian General Inv 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 Canadian General. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Canadian General Inv has no effect on the direction of Talon Metals i.e., Talon Metals and Canadian General go up and down completely randomly.

Pair Corralation between Talon Metals and Canadian General

Assuming the 90 days trading horizon Talon Metals Corp is expected to under-perform the Canadian General. In addition to that, Talon Metals is 3.56 times more volatile than Canadian General Investments. It trades about -0.11 of its total potential returns per unit of risk. Canadian General Investments is currently generating about 0.08 per unit of volatility. If you would invest  3,690  in Canadian General Investments on September 4, 2024 and sell it today you would earn a total of  432.00  from holding Canadian General Investments or generate 11.71% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Talon Metals Corp  vs.  Canadian General Investments

Talon Metals Corp

Risk-Adjusted Performance

0 of 100

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 very healthy basic indicators, Talon Metals is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Canadian General Inv

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Canadian General Investments are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating forward indicators, Canadian General may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Talon Metals and Canadian General

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

The idea behind Talon Metals Corp and Canadian General Investments 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 Global Correlations module to find global opportunities by holding instruments from different markets.