Correlation Between NYSE Composite and Akbank Turk

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

By analyzing existing cross correlation between NYSE Composite and Akbank Turk Anonim, you can compare the effects of market volatilities on NYSE Composite and Akbank Turk 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 NYSE Composite with a short position of Akbank Turk. Check out your portfolio center. Please also check ongoing floating volatility patterns of NYSE Composite and Akbank Turk.

Diversification Opportunities for NYSE Composite and Akbank Turk

-0.27

Correlation Coefficient

NYSE Composite  Akbank Turk

Very good diversification

The 3 months correlation between NYSE and Akbank is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding NYSE Composite and Akbank Turk Anonim in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Akbank Turk Anonim and NYSE Composite 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 NYSE Composite are associated (or correlated) with Akbank Turk. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Akbank Turk Anonim has no effect on the direction of NYSE Composite i.e., NYSE Composite and Akbank Turk go up and down completely randomly.

Pair Corralation between NYSE Composite and Akbank Turk

Assuming the 90 days trading horizon NYSE Composite is expected to generate 5.45 times less return on investment than Akbank Turk. But when comparing it to its historical volatility, NYSE Composite is 5.19 times less risky than Akbank Turk. It trades about 0.37 of its potential returns per unit of risk. Akbank Turk Anonim is currently generating about 0.39 of returns per unit of risk over similar time horizon. If you would invest  280.00  in Akbank Turk Anonim on September 4, 2024 and sell it today you would earn a total of  80.00  from holding Akbank Turk Anonim or generate 28.57% return on investment over 90 days.

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

NYSE Composite  vs.  Akbank Turk Anonim

Pair Trading with NYSE Composite and Akbank Turk

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

The idea behind NYSE Composite and Akbank Turk Anonim 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.