Correlation Between Home Federal and Turkiye Garanti

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

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

Diversification Opportunities for Home Federal and Turkiye Garanti

0.34

Correlation Coefficient

Home Federal  Turkiye Garanti

Weak diversification

The 3 months correlation between Home and Turkiye is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Home Federal Bancorp and Turkiye Garanti Bankasi in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Turkiye Garanti Bankasi and Home Federal 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 Home Federal Bancorp are associated (or correlated) with Turkiye Garanti. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Turkiye Garanti Bankasi has no effect on the direction of Home Federal i.e., Home Federal and Turkiye Garanti go up and down completely randomly.

Pair Corralation between Home Federal and Turkiye Garanti

Given the investment horizon of 90 days Home Federal Bancorp is expected to generate 10.77 times more return on investment than Turkiye Garanti. However, Home Federal is 10.77 times more volatile than Turkiye Garanti Bankasi. It trades about 0.04 of its potential returns per unit of risk. Turkiye Garanti Bankasi is currently generating about 0.08 per unit of risk. If you would invest  1,869  in Home Federal Bancorp on October 3, 2024 and sell it today you would lose (609.00) from holding Home Federal Bancorp or give up 32.58% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	91.81%
Values	Daily Returns

Home Federal Bancorp  vs.  Turkiye Garanti Bankasi

Home Federal Bancorp

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Home Federal Bancorp are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite quite fragile fundamental drivers, Home Federal may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Turkiye Garanti Bankasi

Risk-Adjusted Performance

4 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Turkiye Garanti Bankasi are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak fundamental drivers, Turkiye Garanti may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Home Federal and Turkiye Garanti

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

The idea behind Home Federal Bancorp and Turkiye Garanti Bankasi 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.