Correlation Between Toronto Dominion and VIRGIN WINES

Can any of the company-specific risk be diversified away by investing in both Toronto Dominion 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 Toronto Dominion and VIRGIN WINES into the same portfolio, which is an essential part of the fundamental portfolio management process.

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

Diversification Opportunities for Toronto Dominion and VIRGIN WINES

0.86

Correlation Coefficient

Toronto Dominion  VIRGIN WINES

Very poor diversification

The 3 months correlation between Toronto and VIRGIN is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding The Toronto Dominion Bank 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 Toronto Dominion 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 The Toronto Dominion Bank 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 Toronto Dominion i.e., Toronto Dominion and VIRGIN WINES go up and down completely randomly.

Pair Corralation between Toronto Dominion and VIRGIN WINES

Assuming the 90 days horizon Toronto Dominion is expected to generate 1.37 times less return on investment than VIRGIN WINES. But when comparing it to its historical volatility, The Toronto Dominion Bank is 3.42 times less risky than VIRGIN WINES. It trades about 0.32 of its potential returns per unit of risk. VIRGIN WINES UK is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  37.00  in VIRGIN WINES UK on April 22, 2025 and sell it today you would earn a total of  10.00  from holding VIRGIN WINES UK or generate 27.03% return on investment over 90 days.

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

The Toronto Dominion Bank  vs.  VIRGIN WINES UK

Toronto Dominion

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in The Toronto Dominion Bank are ranked lower than 25 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Toronto Dominion reported solid returns over the last few months and may actually be approaching a breakup point.

VIRGIN WINES UK

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in VIRGIN WINES UK are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, VIRGIN WINES reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Toronto Dominion and VIRGIN WINES

The main advantage of trading using opposite Toronto Dominion and VIRGIN WINES positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Toronto Dominion 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's long position.

The idea behind The Toronto Dominion Bank 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.