Correlation Between Matco Foods and Faysal Bank
Can any of the company-specific risk be diversified away by investing in both Matco Foods 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 Matco Foods and Faysal Bank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Matco Foods and Faysal Bank, you can compare the effects of market volatilities on Matco Foods 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 Matco Foods with a short position of Faysal Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Matco Foods and Faysal Bank.
Diversification Opportunities for Matco Foods and Faysal Bank
-0.18 | Correlation Coefficient |
Good diversification
The 3 months correlation between Matco and Faysal is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding Matco Foods and Faysal Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Faysal Bank and Matco Foods 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 Matco 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 Matco Foods i.e., Matco Foods and Faysal Bank go up and down completely randomly.
Pair Corralation between Matco Foods and Faysal Bank
Assuming the 90 days trading horizon Matco Foods is expected to under-perform the Faysal Bank. In addition to that, Matco Foods is 2.52 times more volatile than Faysal Bank. It trades about -0.13 of its total potential returns per unit of risk. Faysal Bank is currently generating about -0.22 per unit of volatility. If you would invest 4,941 in Faysal Bank on January 14, 2025 and sell it today you would lose (220.00) from holding Faysal Bank or give up 4.45% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Matco Foods vs. Faysal Bank
Performance |
| Timeline |
| Matco Foods |
| Faysal Bank |
Matco Foods and Faysal Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Matco Foods and Faysal Bank
The main advantage of trading using opposite Matco Foods and Faysal Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Matco Foods 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.| Matco Foods vs. Aisha Steel Mills | Matco Foods vs. Security Investment Bank | Matco Foods vs. Mandviwala Mausar Plastic | Matco Foods vs. Air Link Communication |
| Faysal Bank vs. Amreli Steels | Faysal Bank vs. Metropolitan Steel Corp | Faysal Bank vs. Mughal Iron Steel | Faysal Bank vs. Aisha Steel Mills |
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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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