Correlation Between Turkiye Garanti and Banco Do

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

Diversification Opportunities for Turkiye Garanti and Banco Do

0.03

Correlation Coefficient

Turkiye Garanti  Banco Do

Significant diversification

The 3 months correlation between Turkiye and Banco is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Turkiye Garanti Bankasi and Banco do Brasil in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Banco do Brasil 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 Banco Do. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Banco do Brasil has no effect on the direction of Turkiye Garanti i.e., Turkiye Garanti and Banco Do go up and down completely randomly.

Pair Corralation between Turkiye Garanti and Banco Do

Assuming the 90 days horizon Turkiye Garanti Bankasi is expected to generate 5.88 times more return on investment than Banco Do. However, Turkiye Garanti is 5.88 times more volatile than Banco do Brasil. It trades about 0.14 of its potential returns per unit of risk. Banco do Brasil is currently generating about -0.09 per unit of risk. If you would invest  186.00  in Turkiye Garanti Bankasi on January 25, 2024 and sell it today you would earn a total of  54.00  from holding Turkiye Garanti Bankasi or generate 29.03% return on investment over 90 days.

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

Turkiye Garanti Bankasi  vs.  Banco do Brasil

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. In spite of fairly weak fundamental drivers, Turkiye Garanti showed solid returns over the last few months and may actually be approaching a breakup point.

Banco do Brasil

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Banco do Brasil are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Banco Do is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Turkiye Garanti and Banco Do

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

The idea behind Turkiye Garanti Bankasi and Banco do Brasil 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.