Correlation Between Faisal Islamic and Dow Jones
Can any of the company-specific risk be diversified away by investing in both Faisal Islamic and Dow Jones 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 Faisal Islamic and Dow Jones into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Faisal Islamic Bank and Dow Jones Industrial, you can compare the effects of market volatilities on Faisal Islamic and Dow Jones 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 Faisal Islamic with a short position of Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of Faisal Islamic and Dow Jones.
Diversification Opportunities for Faisal Islamic and Dow Jones
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Faisal and Dow is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Faisal Islamic Bank and Dow Jones Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dow Jones Industrial and Faisal Islamic 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 Faisal Islamic Bank are associated (or correlated) with Dow Jones. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dow Jones Industrial has no effect on the direction of Faisal Islamic i.e., Faisal Islamic and Dow Jones go up and down completely randomly.
Pair Corralation between Faisal Islamic and Dow Jones
Assuming the 90 days trading horizon Faisal Islamic Bank is expected to generate 5.31 times more return on investment than Dow Jones. However, Faisal Islamic is 5.31 times more volatile than Dow Jones Industrial. It trades about 0.22 of its potential returns per unit of risk. Dow Jones Industrial is currently generating about 0.38 per unit of risk. If you would invest 3,300 in Faisal Islamic Bank on September 3, 2024 and sell it today you would earn a total of 607.00 from holding Faisal Islamic Bank or generate 18.39% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 85.0% |
| Values | Daily Returns |
Faisal Islamic Bank vs. Dow Jones Industrial
Performance |
| Timeline |
Faisal Islamic and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
Faisal Islamic Bank
Pair trading matchups for Faisal Islamic
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with Faisal Islamic and Dow Jones
The main advantage of trading using opposite Faisal Islamic and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Faisal Islamic position performs unexpectedly, Dow Jones 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 Dow Jones will offset losses from the drop in Dow Jones' long position.| Faisal Islamic vs. Egyptian Chemical Industries | Faisal Islamic vs. Cairo For Investment | Faisal Islamic vs. B Investments Holding | Faisal Islamic vs. Delta Insurance |
| Dow Jones vs. Eastern Co | Dow Jones vs. Uber Technologies | Dow Jones vs. AKITA Drilling | Dow Jones vs. Chemours Co |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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