Correlation Between Aura Minerals and Talon Metals

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

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

Diversification Opportunities for Aura Minerals and Talon Metals

-0.39

Correlation Coefficient

Aura Minerals  Talon Metals

Very good diversification

The 3 months correlation between Aura and Talon is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Aura Minerals 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 Aura Minerals 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 Aura Minerals 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 Aura Minerals i.e., Aura Minerals and Talon Metals go up and down completely randomly.

Pair Corralation between Aura Minerals and Talon Metals

Assuming the 90 days trading horizon Aura Minerals is expected to generate 0.51 times more return on investment than Talon Metals. However, Aura Minerals is 1.96 times less risky than Talon Metals. It trades about 0.08 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  1,548  in Aura Minerals on September 23, 2024 and sell it today you would earn a total of  183.00  from holding Aura Minerals or generate 11.82% return on investment over 90 days.

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

Aura Minerals  vs.  Talon Metals Corp

Aura Minerals

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Aura Minerals are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of very abnormal basic indicators, Aura Minerals 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 Aura Minerals and Talon Metals

The main advantage of trading using opposite Aura Minerals and Talon Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aura Minerals 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 Aura Minerals 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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.