Correlation Between Qatar Natl and Faisal Islamic
Can any of the company-specific risk be diversified away by investing in both Qatar Natl and Faisal Islamic 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 Qatar Natl and Faisal Islamic into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Qatar Natl Bank and Faisal Islamic Bank, you can compare the effects of market volatilities on Qatar Natl and Faisal Islamic 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 Qatar Natl with a short position of Faisal Islamic. Check out your portfolio center. Please also check ongoing floating volatility patterns of Qatar Natl and Faisal Islamic.
Diversification Opportunities for Qatar Natl and Faisal Islamic
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Qatar and Faisal is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Qatar Natl Bank and Faisal Islamic Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Faisal Islamic Bank and Qatar Natl 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 Qatar Natl Bank are associated (or correlated) with Faisal Islamic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Faisal Islamic Bank has no effect on the direction of Qatar Natl i.e., Qatar Natl and Faisal Islamic go up and down completely randomly.
Pair Corralation between Qatar Natl and Faisal Islamic
Assuming the 90 days trading horizon Qatar Natl is expected to generate 2.5 times less return on investment than Faisal Islamic. But when comparing it to its historical volatility, Qatar Natl Bank is 2.48 times less risky than Faisal Islamic. It trades about 0.22 of its potential returns per unit of risk. Faisal Islamic Bank is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest 3,300 in Faisal Islamic Bank on September 2, 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 | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Qatar Natl Bank vs. Faisal Islamic Bank
Performance |
| Timeline |
| Qatar Natl Bank |
| Faisal Islamic Bank |
Qatar Natl and Faisal Islamic Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Qatar Natl and Faisal Islamic
The main advantage of trading using opposite Qatar Natl and Faisal Islamic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Qatar Natl position performs unexpectedly, Faisal Islamic 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 Faisal Islamic will offset losses from the drop in Faisal Islamic's long position.| Qatar Natl vs. Egyptians For Investment | Qatar Natl vs. Misr Oils Soap | Qatar Natl vs. Global Telecom Holding | Qatar Natl vs. Orascom Construction PLC |
| Faisal Islamic vs. Egyptians For Investment | Faisal Islamic vs. Misr Oils Soap | Faisal Islamic vs. Global Telecom Holding | Faisal Islamic vs. Qatar Natl Bank |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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