A Comparative Study of Financial Performance and Risks: Islamic Indices Compared to Conventional Indices

Islamic finance is very successful in the global market, and leading conventional index providers have expanded their range and now offer a wide scope of Islamic indices to help the accelerated development of Islamic finance, particularly Sharia-compliant funds. Considering the ascent of Islamic finance, we will assess and analyze Islamic and conventional stock market indices and their instability. The first objective of this research is to provide a comparison of the performance of the Dow Jones World Index (DJW) and its Islamic counterparts, and then analyze the results. The comparison of the results will be in terms of performance measures. We will then compare the Dow Jones World Index and its Islamic counterparts based on the total risk. This will be measured by Value at Risk (VaR) and Conditional Value at Risk (CVaR). The purpose of this article is to show whether Islamic indices outperform the conventional index and whether the total risk of Islamic indices is lower than that of the conventional index.