Correlation Between BNP Paribas and Templeton Global

Can any of the company-specific risk be diversified away by investing in both BNP Paribas and Templeton Global 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 Templeton Global 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 Templeton Global AD, you can compare the effects of market volatilities on BNP Paribas and Templeton Global 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 Templeton Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of BNP Paribas and Templeton Global.

Diversification Opportunities for BNP Paribas and Templeton Global

0.62

Correlation Coefficient

BNP Paribas  Templeton Global

Poor diversification

The 3 months correlation between BNP and Templeton is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding BNP Paribas Midcap and Templeton Global AD in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Templeton Global 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 Templeton Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Templeton Global has no effect on the direction of BNP Paribas i.e., BNP Paribas and Templeton Global go up and down completely randomly.

Pair Corralation between BNP Paribas and Templeton Global

Assuming the 90 days trading horizon BNP Paribas Midcap is expected to generate 0.77 times more return on investment than Templeton Global. However, BNP Paribas Midcap is 1.3 times less risky than Templeton Global. It trades about -0.06 of its potential returns per unit of risk. Templeton Global AD is currently generating about -0.14 per unit of risk. If you would invest  16,476  in BNP Paribas Midcap on October 7, 2024 and sell it today you would lose (301.00) from holding BNP Paribas Midcap or give up 1.83% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	97.44%
Values	Daily Returns

BNP Paribas Midcap  vs.  Templeton Global AD

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 fairly strong basic indicators, BNP Paribas is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

Templeton Global

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Templeton Global AD has generated negative risk-adjusted returns adding no value to fund investors. In spite of rather sound technical and fundamental indicators, Templeton Global is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with BNP Paribas and Templeton Global

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

The idea behind BNP Paribas Midcap and Templeton Global AD 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.