Correlation Between Talon Metals and Dynasty Gold

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

Diversification Opportunities for Talon Metals and Dynasty Gold

-0.1

Correlation Coefficient

Talon Metals  Dynasty Gold

Good diversification

The 3 months correlation between Talon and Dynasty is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding Talon Metals Corp and Dynasty Gold Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dynasty Gold 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 Dynasty Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dynasty Gold Corp has no effect on the direction of Talon Metals i.e., Talon Metals and Dynasty Gold go up and down completely randomly.

Pair Corralation between Talon Metals and Dynasty Gold

Assuming the 90 days trading horizon Talon Metals Corp is expected to under-perform the Dynasty Gold. But the stock apears to be less risky and, when comparing its historical volatility, Talon Metals Corp is 1.49 times less risky than Dynasty Gold. The stock trades about -0.05 of its potential returns per unit of risk. The Dynasty Gold Corp is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  22.00  in Dynasty Gold Corp on October 25, 2024 and sell it today you would lose (8.00) from holding Dynasty Gold Corp or give up 36.36% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	99.8%
Values	Daily Returns

Talon Metals Corp  vs.  Dynasty Gold Corp

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 latest unfluctuating performance, the Stock's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Dynasty Gold Corp

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Dynasty Gold Corp are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Dynasty Gold showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Talon Metals and Dynasty Gold

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

The idea behind Talon Metals Corp and Dynasty Gold 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.