Correlation Between Turkiye Garanti and Home Federal

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

Diversification Opportunities for Turkiye Garanti and Home Federal

0.26

Correlation Coefficient

Turkiye Garanti  Home Federal

Modest diversification

The 3 months correlation between Turkiye and Home is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Turkiye Garanti Bankasi and Home Federal Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Home Federal Bancorp 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 Home Federal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Home Federal Bancorp has no effect on the direction of Turkiye Garanti i.e., Turkiye Garanti and Home Federal go up and down completely randomly.

Pair Corralation between Turkiye Garanti and Home Federal

Assuming the 90 days horizon Turkiye Garanti is expected to generate 5.7 times less return on investment than Home Federal. But when comparing it to its historical volatility, Turkiye Garanti Bankasi is 10.77 times less risky than Home Federal. It trades about 0.08 of its potential returns per unit of risk. Home Federal Bancorp is currently generating about 0.04 of returns per unit of risk over similar time horizon. 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

Turkiye Garanti Bankasi  vs.  Home Federal Bancorp

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.

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.

Pair Trading with Turkiye Garanti and Home Federal

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

The idea behind Turkiye Garanti Bankasi and Home Federal Bancorp 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.