Correlation Between Talon Metals and Giga Metals

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

Diversification Opportunities for Talon Metals and Giga Metals

0.07

Correlation Coefficient

Talon Metals  Giga Metals

Significant diversification

The 3 months correlation between Talon and Giga is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Talon Metals Corp and Giga Metals Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Giga Metals 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 Giga Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Giga Metals Corp has no effect on the direction of Talon Metals i.e., Talon Metals and Giga Metals go up and down completely randomly.

Pair Corralation between Talon Metals and Giga Metals

Assuming the 90 days horizon Talon Metals Corp is expected to generate 0.56 times more return on investment than Giga Metals. However, Talon Metals Corp is 1.78 times less risky than Giga Metals. It trades about 0.04 of its potential returns per unit of risk. Giga Metals Corp is currently generating about -0.24 per unit of risk. If you would invest  6.10  in Talon Metals Corp on September 12, 2024 and sell it today you would earn a total of  0.10  from holding Talon Metals Corp or generate 1.64% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	91.3%
Values	Daily Returns

Talon Metals Corp  vs.  Giga Metals Corp

Talon Metals Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Talon Metals Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable technical and fundamental indicators, Talon Metals is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Giga Metals Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Giga Metals Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal performance, the Stock's technical and fundamental indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

Pair Trading with Talon Metals and Giga Metals

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

The idea behind Talon Metals Corp and Giga 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 Anywhere module to track or share privately all of your investments from the convenience of any device.