Correlation Between Olympia Financial and Talon Metals

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

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

Diversification Opportunities for Olympia Financial and Talon Metals

-0.13

Correlation Coefficient

Olympia Financial  Talon Metals

Good diversification

The 3 months correlation between Olympia and Talon is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding Olympia Financial Group 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 Olympia Financial 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 Olympia Financial Group 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 Olympia Financial i.e., Olympia Financial and Talon Metals go up and down completely randomly.

Pair Corralation between Olympia Financial and Talon Metals

Assuming the 90 days trading horizon Olympia Financial Group is expected to generate 0.27 times more return on investment than Talon Metals. However, Olympia Financial Group is 3.77 times less risky than Talon Metals. It trades about 0.11 of its potential returns per unit of risk. Talon Metals Corp is currently generating about 0.02 per unit of risk. If you would invest  9,828  in Olympia Financial Group on September 23, 2024 and sell it today you would earn a total of  822.00  from holding Olympia Financial Group or generate 8.36% return on investment over 90 days.

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

Olympia Financial Group  vs.  Talon Metals Corp

Olympia Financial

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Olympia Financial Group are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Olympia Financial may actually be approaching a critical reversion point that can send shares even higher in January 2025.

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. In spite of very abnormal basic indicators, Talon Metals may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Olympia Financial and Talon Metals

The main advantage of trading using opposite Olympia Financial and Talon Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Olympia Financial 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 Olympia Financial Group 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.

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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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.