Correlation Between Regions Financial and Akbank Turk

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

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

Diversification Opportunities for Regions Financial and Akbank Turk

-0.23

Correlation Coefficient

Regions Financial  Akbank Turk

Very good diversification

The 3 months correlation between Regions and Akbank is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding Regions Financial 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 Regions Financial 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 Regions Financial 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 Regions Financial i.e., Regions Financial and Akbank Turk go up and down completely randomly.

Pair Corralation between Regions Financial and Akbank Turk

Allowing for the 90-day total investment horizon Regions Financial is expected to generate 0.69 times more return on investment than Akbank Turk. However, Regions Financial is 1.45 times less risky than Akbank Turk. It trades about 0.27 of its potential returns per unit of risk. Akbank Turk Anonim is currently generating about 0.16 per unit of risk. If you would invest  2,356  in Regions Financial on September 2, 2024 and sell it today you would earn a total of  370.00  from holding Regions Financial or generate 15.7% return on investment over 90 days.

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

Regions Financial  vs.  Akbank Turk Anonim

Regions Financial

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Regions Financial are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak technical and fundamental indicators, Regions Financial reported solid returns over the last few months and may actually be approaching a breakup point.

Akbank Turk Anonim

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Akbank Turk Anonim has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Akbank Turk is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Regions Financial and Akbank Turk

The main advantage of trading using opposite Regions Financial and Akbank Turk positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Regions Financial 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 Regions Financial 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.