Correlation Between TBC Bank and Virgin Wines

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

By analyzing existing cross correlation between TBC Bank Group and Virgin Wines UK, you can compare the effects of market volatilities on TBC Bank and Virgin Wines 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 TBC Bank with a short position of Virgin Wines. Check out your portfolio center. Please also check ongoing floating volatility patterns of TBC Bank and Virgin Wines.

Diversification Opportunities for TBC Bank and Virgin Wines

0.49

Correlation Coefficient

TBC Bank  Virgin Wines

Very weak diversification

The 3 months correlation between TBC and Virgin is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding TBC Bank Group and Virgin Wines UK in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Virgin Wines UK and TBC Bank 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 TBC Bank Group are associated (or correlated) with Virgin Wines. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Virgin Wines UK has no effect on the direction of TBC Bank i.e., TBC Bank and Virgin Wines go up and down completely randomly.

Pair Corralation between TBC Bank and Virgin Wines

Assuming the 90 days trading horizon TBC Bank is expected to generate 2.39 times less return on investment than Virgin Wines. But when comparing it to its historical volatility, TBC Bank Group is 1.32 times less risky than Virgin Wines. It trades about 0.13 of its potential returns per unit of risk. Virgin Wines UK is currently generating about 0.23 of returns per unit of risk over similar time horizon. If you would invest  4,200  in Virgin Wines UK on April 22, 2025 and sell it today you would earn a total of  1,850  from holding Virgin Wines UK or generate 44.05% return on investment over 90 days.

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

TBC Bank Group  vs.  Virgin Wines UK

TBC Bank Group

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in TBC Bank Group are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, TBC Bank unveiled solid returns over the last few months and may actually be approaching a breakup point.

Virgin Wines UK

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Virgin Wines UK are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Virgin Wines unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with TBC Bank and Virgin Wines

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

The idea behind TBC Bank Group and Virgin Wines UK 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 Transaction History module to view history of all your transactions and understand their impact on performance.