Correlation Between Talon Metals and RT Minerals

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

Diversification Opportunities for Talon Metals and RT Minerals

0.39

Correlation Coefficient

Talon Metals  RT Minerals

Weak diversification

The 3 months correlation between Talon and RTM is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Talon Metals Corp and RT Minerals Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RT Minerals 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 RT Minerals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of RT Minerals Corp has no effect on the direction of Talon Metals i.e., Talon Metals and RT Minerals go up and down completely randomly.

Pair Corralation between Talon Metals and RT Minerals

Assuming the 90 days trading horizon Talon Metals Corp is expected to generate 1.05 times more return on investment than RT Minerals. However, Talon Metals is 1.05 times more volatile than RT Minerals Corp. It trades about 0.04 of its potential returns per unit of risk. RT Minerals Corp is currently generating about -0.01 per unit of risk. If you would invest  9.00  in Talon Metals Corp on September 15, 2024 and sell it today you would earn a total of  0.50  from holding Talon Metals Corp or generate 5.56% return on investment over 90 days.

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

Talon Metals Corp  vs.  RT Minerals Corp

Talon Metals Corp

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Talon Metals Corp are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Talon Metals may actually be approaching a critical reversion point that can send shares even higher in January 2025.

RT Minerals Corp

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Talon Metals and RT Minerals

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

The idea behind Talon Metals Corp and RT Minerals 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.