Correlation Between Turkiye Garanti and Vakif Menkul

Can any of the company-specific risk be diversified away by investing in both Turkiye Garanti and Vakif Menkul 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 Turkiye Garanti and Vakif Menkul into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Turkiye Garanti Bankasi and Vakif Menkul Kiymet, you can compare the effects of market volatilities on Turkiye Garanti and Vakif Menkul 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 Turkiye Garanti with a short position of Vakif Menkul. Check out your portfolio center. Please also check ongoing floating volatility patterns of Turkiye Garanti and Vakif Menkul.

Diversification Opportunities for Turkiye Garanti and Vakif Menkul

0.44

Correlation Coefficient

Turkiye Garanti  Vakif Menkul

Very weak diversification

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

Pair Corralation between Turkiye Garanti and Vakif Menkul

Assuming the 90 days trading horizon Turkiye Garanti Bankasi is expected to generate 1.76 times more return on investment than Vakif Menkul. However, Turkiye Garanti is 1.76 times more volatile than Vakif Menkul Kiymet. It trades about 0.09 of its potential returns per unit of risk. Vakif Menkul Kiymet is currently generating about -0.34 per unit of risk. If you would invest  12,440  in Turkiye Garanti Bankasi on October 6, 2024 and sell it today you would earn a total of  470.00  from holding Turkiye Garanti Bankasi or generate 3.78% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	95.45%
Values	Daily Returns

Turkiye Garanti Bankasi  vs.  Vakif Menkul Kiymet

Turkiye Garanti Bankasi

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Turkiye Garanti Bankasi are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite fairly inconsistent forward indicators, Turkiye Garanti demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Vakif Menkul Kiymet

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Vakif Menkul Kiymet are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong forward indicators, Vakif Menkul is not utilizing all of its potentials. The recent stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Turkiye Garanti and Vakif Menkul

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

The idea behind Turkiye Garanti Bankasi and Vakif Menkul Kiymet 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.