Correlation Between Talon Metals and Wilmington Capital

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

Diversification Opportunities for Talon Metals and Wilmington Capital

0.24

Correlation Coefficient

Talon Metals  Wilmington Capital

Modest diversification

The 3 months correlation between Talon and Wilmington is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Talon Metals Corp and Wilmington Capital Management in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wilmington Capital 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 Wilmington Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wilmington Capital has no effect on the direction of Talon Metals i.e., Talon Metals and Wilmington Capital go up and down completely randomly.

Pair Corralation between Talon Metals and Wilmington Capital

Assuming the 90 days trading horizon Talon Metals Corp is expected to generate 4.55 times more return on investment than Wilmington Capital. However, Talon Metals is 4.55 times more volatile than Wilmington Capital Management. It trades about 0.01 of its potential returns per unit of risk. Wilmington Capital Management is currently generating about -0.18 per unit of risk. If you would invest  9.00  in Talon Metals Corp on December 2, 2024 and sell it today you would lose (1.00) from holding Talon Metals Corp or give up 11.11% of portfolio value over 90 days.

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

Talon Metals Corp  vs.  Wilmington Capital Management

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.

Wilmington Capital

Risk-Adjusted Performance

Very Weak

Over the last 90 days Wilmington Capital Management 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 comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Talon Metals and Wilmington Capital

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

The idea behind Talon Metals Corp and Wilmington Capital Management 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.