Correlation Between Turkiye Garanti and Eurobank Ergasias

Can any of the company-specific risk be diversified away by investing in both Turkiye Garanti and Eurobank Ergasias 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 Eurobank Ergasias 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 Eurobank Ergasias Services, you can compare the effects of market volatilities on Turkiye Garanti and Eurobank Ergasias 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 Eurobank Ergasias. Check out your portfolio center. Please also check ongoing floating volatility patterns of Turkiye Garanti and Eurobank Ergasias.

Diversification Opportunities for Turkiye Garanti and Eurobank Ergasias

-0.11

Correlation Coefficient

Turkiye Garanti  Eurobank Ergasias

Good diversification

The 3 months correlation between Turkiye and Eurobank is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding Turkiye Garanti Bankasi and Eurobank Ergasias Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eurobank Ergasias 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 Eurobank Ergasias. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eurobank Ergasias has no effect on the direction of Turkiye Garanti i.e., Turkiye Garanti and Eurobank Ergasias go up and down completely randomly.

Pair Corralation between Turkiye Garanti and Eurobank Ergasias

Assuming the 90 days horizon Turkiye Garanti Bankasi is expected to under-perform the Eurobank Ergasias. In addition to that, Turkiye Garanti is 1.55 times more volatile than Eurobank Ergasias Services. It trades about -0.04 of its total potential returns per unit of risk. Eurobank Ergasias Services is currently generating about 0.09 per unit of volatility. If you would invest  224.00  in Eurobank Ergasias Services on December 30, 2024 and sell it today you would earn a total of  22.00  from holding Eurobank Ergasias Services or generate 9.82% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	87.1%
Values	Daily Returns

Turkiye Garanti Bankasi  vs.  Eurobank Ergasias Services

Turkiye Garanti Bankasi

Risk-Adjusted Performance

Very Weak

Over the last 90 days Turkiye Garanti Bankasi has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's fundamental drivers remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Eurobank Ergasias

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Eurobank Ergasias Services are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak technical and fundamental indicators, Eurobank Ergasias may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Turkiye Garanti and Eurobank Ergasias

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

The idea behind Turkiye Garanti Bankasi and Eurobank Ergasias Services 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.