Correlation Between Talon Metals and Capstone Mining

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

Diversification Opportunities for Talon Metals and Capstone Mining

0.49

Correlation Coefficient

Talon Metals  Capstone Mining

Very weak diversification

The 3 months correlation between Talon and Capstone is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Talon Metals Corp and Capstone Mining Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Capstone Mining Corp 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 Capstone Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Capstone Mining Corp has no effect on the direction of Talon Metals i.e., Talon Metals and Capstone Mining go up and down completely randomly.

Pair Corralation between Talon Metals and Capstone Mining

Assuming the 90 days trading horizon Talon Metals Corp is expected to under-perform the Capstone Mining. In addition to that, Talon Metals is 1.58 times more volatile than Capstone Mining Corp. It trades about -0.05 of its total potential returns per unit of risk. Capstone Mining Corp is currently generating about 0.03 per unit of volatility. If you would invest  604.00  in Capstone Mining Corp on December 1, 2024 and sell it today you would earn a total of  195.00  from holding Capstone Mining Corp or generate 32.28% return on investment over 90 days.

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

Talon Metals Corp  vs.  Capstone Mining Corp

Talon Metals Corp

Risk-Adjusted Performance

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

Capstone Mining Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days Capstone Mining 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 April 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Talon Metals and Capstone Mining

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

The idea behind Talon Metals Corp and Capstone Mining 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.