Correlation Between Big Bird and Faysal Bank
Can any of the company-specific risk be diversified away by investing in both Big Bird and Faysal Bank 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 Big Bird and Faysal Bank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Big Bird Foods and Faysal Bank, you can compare the effects of market volatilities on Big Bird and Faysal Bank 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 Big Bird with a short position of Faysal Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Big Bird and Faysal Bank.
Diversification Opportunities for Big Bird and Faysal Bank
-0.55 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Big and Faysal is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding Big Bird Foods and Faysal Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Faysal Bank and Big Bird 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 Big Bird Foods are associated (or correlated) with Faysal Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Faysal Bank has no effect on the direction of Big Bird i.e., Big Bird and Faysal Bank go up and down completely randomly.
Pair Corralation between Big Bird and Faysal Bank
Assuming the 90 days trading horizon Big Bird is expected to generate 1.22 times less return on investment than Faysal Bank. In addition to that, Big Bird is 1.55 times more volatile than Faysal Bank. It trades about 0.05 of its total potential returns per unit of risk. Faysal Bank is currently generating about 0.1 per unit of volatility. If you would invest 2,774 in Faysal Bank on September 4, 2024 and sell it today you would earn a total of 1,989 from holding Faysal Bank or generate 71.7% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 35.42% |
| Values | Daily Returns |
Big Bird Foods vs. Faysal Bank
Performance |
| Timeline |
| Big Bird Foods |
| Faysal Bank |
Big Bird and Faysal Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Big Bird and Faysal Bank
The main advantage of trading using opposite Big Bird and Faysal Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Big Bird position performs unexpectedly, Faysal Bank 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 Faysal Bank will offset losses from the drop in Faysal Bank's long position.| Big Bird vs. Habib Insurance | Big Bird vs. Pakistan Refinery | Big Bird vs. Century Insurance | Big Bird vs. Reliance Weaving Mills |
| Faysal Bank vs. Big Bird Foods | Faysal Bank vs. First Credit And | Faysal Bank vs. Hi Tech Lubricants | Faysal Bank vs. National Bank of |
Check out your portfolio center.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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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