Correlation Between Visa and Turkiye Garanti

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

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

Diversification Opportunities for Visa and Turkiye Garanti

-0.55

Correlation Coefficient

Visa  Turkiye Garanti

Excellent diversification

The 3 months correlation between Visa and Turkiye is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A 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 Visa 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 Visa Class A 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 Visa i.e., Visa and Turkiye Garanti go up and down completely randomly.

Pair Corralation between Visa and Turkiye Garanti

Taking into account the 90-day investment horizon Visa Class A is expected to under-perform the Turkiye Garanti. But the stock apears to be less risky and, when comparing its historical volatility, Visa Class A is 9.56 times less risky than Turkiye Garanti. The stock trades about -0.14 of its potential returns per unit of risk. The Turkiye Garanti Bankasi is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest  195.00  in Turkiye Garanti Bankasi on January 26, 2024 and sell it today you would earn a total of  45.00  from holding Turkiye Garanti Bankasi or generate 23.08% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Visa Class A  vs.  Turkiye Garanti Bankasi

Visa Class A

Risk-Adjusted Performance

4 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Visa Class A are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, Visa is not utilizing all of its potentials. The newest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

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 fragile fundamental drivers, Turkiye Garanti showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Visa and Turkiye Garanti

The main advantage of trading using opposite Visa and Turkiye Garanti positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Visa 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 Visa Class A 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.