Correlation Between Ioneer and Talon Metals

Can any of the company-specific risk be diversified away by investing in both Ioneer and Talon Metals 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 Ioneer and Talon Metals into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between ioneer and Talon Metals Corp, you can compare the effects of market volatilities on Ioneer and Talon Metals 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 Ioneer with a short position of Talon Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ioneer and Talon Metals.

Diversification Opportunities for Ioneer and Talon Metals

0.16

Correlation Coefficient

Ioneer  Talon Metals

Average diversification

The 3 months correlation between Ioneer and Talon is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding ioneer and Talon Metals Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Talon Metals Corp and Ioneer 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 ioneer are associated (or correlated) with Talon Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Talon Metals Corp has no effect on the direction of Ioneer i.e., Ioneer and Talon Metals go up and down completely randomly.

Pair Corralation between Ioneer and Talon Metals

Assuming the 90 days horizon ioneer is expected to under-perform the Talon Metals. In addition to that, Ioneer is 3.03 times more volatile than Talon Metals Corp. It trades about -0.08 of its total potential returns per unit of risk. Talon Metals Corp is currently generating about 0.19 per unit of volatility. If you would invest  5.90  in Talon Metals Corp on September 14, 2024 and sell it today you would earn a total of  0.70  from holding Talon Metals Corp or generate 11.86% return on investment over 90 days.

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

ioneer  vs.  Talon Metals Corp

ioneer

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in ioneer are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile fundamental indicators, Ioneer reported solid returns over the last few months and may actually be approaching a breakup point.

Talon Metals Corp

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Talon Metals Corp are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile technical and fundamental indicators, Talon Metals may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Ioneer and Talon Metals

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

The idea behind ioneer and Talon Metals 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.

Check out your portfolio center.

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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.