Correlation Between BNP Paribas and Ailleron

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

By analyzing existing cross correlation between BNP Paribas Bank and Ailleron SA, you can compare the effects of market volatilities on BNP Paribas and Ailleron 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 Ailleron. Check out your portfolio center. Please also check ongoing floating volatility patterns of BNP Paribas and Ailleron.

Diversification Opportunities for BNP Paribas and Ailleron

0.32

Correlation Coefficient

BNP Paribas  Ailleron

Weak diversification

The 3 months correlation between BNP and Ailleron is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding BNP Paribas Bank and Ailleron SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ailleron SA 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 Bank are associated (or correlated) with Ailleron. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ailleron SA has no effect on the direction of BNP Paribas i.e., BNP Paribas and Ailleron go up and down completely randomly.

Pair Corralation between BNP Paribas and Ailleron

Assuming the 90 days trading horizon BNP Paribas Bank is expected to generate 1.02 times more return on investment than Ailleron. However, BNP Paribas is 1.02 times more volatile than Ailleron SA. It trades about 0.23 of its potential returns per unit of risk. Ailleron SA is currently generating about 0.08 per unit of risk. If you would invest  8,520  in BNP Paribas Bank on December 30, 2024 and sell it today you would earn a total of  2,530  from holding BNP Paribas Bank or generate 29.69% return on investment over 90 days.

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

BNP Paribas Bank  vs.  Ailleron SA

BNP Paribas Bank

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in BNP Paribas Bank are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, BNP Paribas reported solid returns over the last few months and may actually be approaching a breakup point.

Ailleron SA

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Ailleron SA are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Ailleron may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with BNP Paribas and Ailleron

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

The idea behind BNP Paribas Bank and Ailleron SA 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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.