Correlation Between Talon Metals and Tree Island

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

Diversification Opportunities for Talon Metals and Tree Island

0.44

Correlation Coefficient

Talon Metals  Tree Island

Very weak diversification

The 3 months correlation between Talon and Tree is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Talon Metals Corp and Tree Island Steel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tree Island Steel 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 Tree Island. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tree Island Steel has no effect on the direction of Talon Metals i.e., Talon Metals and Tree Island go up and down completely randomly.

Pair Corralation between Talon Metals and Tree Island

Assuming the 90 days trading horizon Talon Metals Corp is expected to generate 3.16 times more return on investment than Tree Island. However, Talon Metals is 3.16 times more volatile than Tree Island Steel. It trades about 0.17 of its potential returns per unit of risk. Tree Island Steel is currently generating about 0.08 per unit of risk. If you would invest  24.00  in Talon Metals Corp on July 8, 2025 and sell it today you would earn a total of  15.00  from holding Talon Metals Corp or generate 62.5% return on investment over 90 days.

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

Talon Metals Corp  vs.  Tree Island Steel

Talon Metals Corp

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Talon Metals Corp are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of very abnormal basic indicators, Talon Metals displayed solid returns over the last few months and may actually be approaching a breakup point.

Tree Island Steel

Risk-Adjusted Performance

Mild

Compared to the overall equity markets, risk-adjusted returns on investments in Tree Island Steel are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating essential indicators, Tree Island may actually be approaching a critical reversion point that can send shares even higher in November 2025.

Pair Trading with Talon Metals and Tree Island

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

The idea behind Talon Metals Corp and Tree Island Steel 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.