Correlation Between BNP Paribas and URBAN OUTFITTERS

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Can any of the company-specific risk be diversified away by investing in both BNP Paribas and URBAN OUTFITTERS 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 URBAN OUTFITTERS into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BNP Paribas SA and URBAN OUTFITTERS, you can compare the effects of market volatilities on BNP Paribas and URBAN OUTFITTERS 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 URBAN OUTFITTERS. Check out your portfolio center. Please also check ongoing floating volatility patterns of BNP Paribas and URBAN OUTFITTERS.

Diversification Opportunities for BNP Paribas and URBAN OUTFITTERS

-0.66
  Correlation Coefficient

Excellent diversification

The 3 months correlation between BNP and URBAN is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding BNP Paribas SA and URBAN OUTFITTERS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on URBAN OUTFITTERS 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 SA are associated (or correlated) with URBAN OUTFITTERS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of URBAN OUTFITTERS has no effect on the direction of BNP Paribas i.e., BNP Paribas and URBAN OUTFITTERS go up and down completely randomly.

Pair Corralation between BNP Paribas and URBAN OUTFITTERS

Assuming the 90 days horizon BNP Paribas SA is expected to under-perform the URBAN OUTFITTERS. But the stock apears to be less risky and, when comparing its historical volatility, BNP Paribas SA is 1.54 times less risky than URBAN OUTFITTERS. The stock trades about -0.08 of its potential returns per unit of risk. The URBAN OUTFITTERS is currently generating about 0.62 of returns per unit of risk over similar time horizon. If you would invest  4,720  in URBAN OUTFITTERS on October 9, 2024 and sell it today you would earn a total of  830.00  from holding URBAN OUTFITTERS or generate 17.58% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

BNP Paribas SA  vs.  URBAN OUTFITTERS

 Performance 
       Timeline  
BNP Paribas SA 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days BNP Paribas SA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, BNP Paribas is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.
URBAN OUTFITTERS 

Risk-Adjusted Performance

22 of 100

 
Weak
 
Strong
Solid
Compared to the overall equity markets, risk-adjusted returns on investments in URBAN OUTFITTERS are ranked lower than 22 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, URBAN OUTFITTERS unveiled solid returns over the last few months and may actually be approaching a breakup point.

BNP Paribas and URBAN OUTFITTERS Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with BNP Paribas and URBAN OUTFITTERS

The main advantage of trading using opposite BNP Paribas and URBAN OUTFITTERS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BNP Paribas position performs unexpectedly, URBAN OUTFITTERS 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 URBAN OUTFITTERS will offset losses from the drop in URBAN OUTFITTERS's long position.
The idea behind BNP Paribas SA and URBAN OUTFITTERS 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.

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