Correlation Between Tourmaline Bio and Diageo PLC

Can any of the company-specific risk be diversified away by investing in both Tourmaline Bio and Diageo PLC 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 Tourmaline Bio and Diageo PLC into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Tourmaline Bio and Diageo PLC ADR, you can compare the effects of market volatilities on Tourmaline Bio and Diageo PLC 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 Tourmaline Bio with a short position of Diageo PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tourmaline Bio and Diageo PLC.

Diversification Opportunities for Tourmaline Bio and Diageo PLC

-0.79

Correlation Coefficient

Tourmaline Bio  Diageo PLC

Pay attention - limited upside

The 3 months correlation between Tourmaline and Diageo is -0.79. Overlapping area represents the amount of risk that can be diversified away by holding Tourmaline Bio and Diageo PLC ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Diageo PLC ADR and Tourmaline Bio 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 Tourmaline Bio are associated (or correlated) with Diageo PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Diageo PLC ADR has no effect on the direction of Tourmaline Bio i.e., Tourmaline Bio and Diageo PLC go up and down completely randomly.

Pair Corralation between Tourmaline Bio and Diageo PLC

Given the investment horizon of 90 days Tourmaline Bio is expected to generate 4.91 times more return on investment than Diageo PLC. However, Tourmaline Bio is 4.91 times more volatile than Diageo PLC ADR. It trades about 0.21 of its potential returns per unit of risk. Diageo PLC ADR is currently generating about -0.06 per unit of risk. If you would invest  1,977  in Tourmaline Bio on July 25, 2025 and sell it today you would earn a total of  2,820  from holding Tourmaline Bio or generate 142.64% return on investment over 90 days.

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

Tourmaline Bio  vs.  Diageo PLC ADR

Tourmaline Bio

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Tourmaline Bio are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite quite weak primary indicators, Tourmaline Bio disclosed solid returns over the last few months and may actually be approaching a breakup point.

Diageo PLC ADR

Risk-Adjusted Performance

Weakest

Over the last 90 days Diageo PLC ADR has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy technical and fundamental indicators, Diageo PLC is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Tourmaline Bio and Diageo PLC

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

The idea behind Tourmaline Bio and Diageo PLC ADR 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.