Correlation Between BNP Paribas and R Co

Can any of the company-specific risk be diversified away by investing in both BNP Paribas and R Co 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 BNP Paribas and R Co into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between BNP Paribas Midcap and R co Valor F, you can compare the effects of market volatilities on BNP Paribas and R Co 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 BNP Paribas with a short position of R Co. Check out your portfolio center. Please also check ongoing floating volatility patterns of BNP Paribas and R Co.

Diversification Opportunities for BNP Paribas and R Co

-0.53

Correlation Coefficient

BNP Paribas  R Co

Excellent diversification

The 3 months correlation between BNP and 0P00017SX2 is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding BNP Paribas Midcap and R co Valor F in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on R co Valor and BNP Paribas 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 BNP Paribas Midcap are associated (or correlated) with R Co. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of R co Valor has no effect on the direction of BNP Paribas i.e., BNP Paribas and R Co go up and down completely randomly.

Pair Corralation between BNP Paribas and R Co

Assuming the 90 days trading horizon BNP Paribas Midcap is expected to under-perform the R Co. In addition to that, BNP Paribas is 1.15 times more volatile than R co Valor F. It trades about -0.15 of its total potential returns per unit of risk. R co Valor F is currently generating about 0.09 per unit of volatility. If you would invest  294,877  in R co Valor F on September 26, 2024 and sell it today you would earn a total of  10,325  from holding R co Valor F or generate 3.5% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

BNP Paribas Midcap  vs.  R co Valor F

BNP Paribas Midcap

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days BNP Paribas Midcap has generated negative risk-adjusted returns adding no value to fund investors. Despite latest weak performance, the Fund's basic indicators remain strong and the recent confusion on Wall Street may also be a sign of long-lasting gains for the fund traders.

R co Valor

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in R co Valor F are ranked lower than 6 (%) of all funds and portfolios of funds over the last 90 days. Despite somewhat strong basic indicators, R Co is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with BNP Paribas and R Co

The main advantage of trading using opposite BNP Paribas and R Co positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BNP Paribas position performs unexpectedly, R Co 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 R Co will offset losses from the drop in R Co's long position.

The idea behind BNP Paribas Midcap and R co Valor F pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.