Correlation Between BNP Paribas and Drago Entertainment

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

Diversification Opportunities for BNP Paribas and Drago Entertainment

0.32

Correlation Coefficient

BNP Paribas  Drago Entertainment

Weak diversification

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

Pair Corralation between BNP Paribas and Drago Entertainment

Assuming the 90 days trading horizon BNP Paribas Bank is expected to generate 0.53 times more return on investment than Drago Entertainment. However, BNP Paribas Bank is 1.9 times less risky than Drago Entertainment. It trades about 0.23 of its potential returns per unit of risk. Drago entertainment SA is currently generating about -0.01 per unit of risk. If you would invest  8,220  in BNP Paribas Bank on October 25, 2024 and sell it today you would earn a total of  980.00  from holding BNP Paribas Bank or generate 11.92% 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.  Drago entertainment SA

BNP Paribas Bank

Risk-Adjusted Performance

0 of 100

Weak

Over the last 90 days BNP Paribas Bank has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, BNP Paribas is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Drago entertainment

Risk-Adjusted Performance

3 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Drago entertainment SA are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Drago Entertainment may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with BNP Paribas and Drago Entertainment

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

The idea behind BNP Paribas Bank and Drago entertainment 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.