Correlation Between Faisal Islamic and Egyptian Gulf
Can any of the company-specific risk be diversified away by investing in both Faisal Islamic and Egyptian Gulf 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 Egyptian Gulf 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 Egyptian Gulf Bank, you can compare the effects of market volatilities on Faisal Islamic and Egyptian Gulf 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 Egyptian Gulf. Check out your portfolio center. Please also check ongoing floating volatility patterns of Faisal Islamic and Egyptian Gulf.
Diversification Opportunities for Faisal Islamic and Egyptian Gulf
0.23 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Faisal and Egyptian is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Faisal Islamic Bank and Egyptian Gulf Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Egyptian Gulf Bank 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 Egyptian Gulf. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Egyptian Gulf Bank has no effect on the direction of Faisal Islamic i.e., Faisal Islamic and Egyptian Gulf go up and down completely randomly.
Pair Corralation between Faisal Islamic and Egyptian Gulf
Assuming the 90 days trading horizon Faisal Islamic Bank is expected to generate 1.05 times more return on investment than Egyptian Gulf. However, Faisal Islamic is 1.05 times more volatile than Egyptian Gulf Bank. It trades about 0.07 of its potential returns per unit of risk. Egyptian Gulf Bank is currently generating about -0.06 per unit of risk. If you would invest 2,700 in Faisal Islamic Bank on August 31, 2024 and sell it today you would earn a total of 1,207 from holding Faisal Islamic Bank or generate 44.7% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Faisal Islamic Bank vs. Egyptian Gulf Bank
Performance |
| Timeline |
| Faisal Islamic Bank |
| Egyptian Gulf Bank |
Faisal Islamic and Egyptian Gulf Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Faisal Islamic and Egyptian Gulf
The main advantage of trading using opposite Faisal Islamic and Egyptian Gulf positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Faisal Islamic position performs unexpectedly, Egyptian Gulf 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 Egyptian Gulf will offset losses from the drop in Egyptian Gulf's long position.| Faisal Islamic vs. Egyptians For Investment | Faisal Islamic vs. Misr Hotels | Faisal Islamic vs. International Agricultural Products | Faisal Islamic vs. El Ahli Investment |
| Egyptian Gulf vs. Paint Chemicals Industries | Egyptian Gulf vs. Reacap Financial Investments | Egyptian Gulf vs. Egyptians For Investment | Egyptian Gulf vs. Misr Oils Soap |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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