Correlation Between BNP Paribas and Community Bankers

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

Diversification Opportunities for BNP Paribas and Community Bankers

0.64

Correlation Coefficient

BNP Paribas  Community Bankers

Poor diversification

The 3 months correlation between BNP and Community is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding BNP Paribas SA and Community Bankers in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Community Bankers 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 Community Bankers. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Community Bankers has no effect on the direction of BNP Paribas i.e., BNP Paribas and Community Bankers go up and down completely randomly.

Pair Corralation between BNP Paribas and Community Bankers

Assuming the 90 days horizon BNP Paribas SA is expected to generate 0.57 times more return on investment than Community Bankers. However, BNP Paribas SA is 1.76 times less risky than Community Bankers. It trades about 0.24 of its potential returns per unit of risk. Community Bankers is currently generating about -0.17 per unit of risk. If you would invest  6,850  in BNP Paribas SA on December 2, 2024 and sell it today you would earn a total of  721.00  from holding BNP Paribas SA or generate 10.53% return on investment over 90 days.

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

BNP Paribas SA  vs.  Community Bankers

BNP Paribas SA

Risk-Adjusted Performance

Solid

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

Community Bankers

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Community Bankers are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable basic indicators, Community Bankers is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with BNP Paribas and Community Bankers

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

The idea behind BNP Paribas SA and Community Bankers 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.

Check out your portfolio center.

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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.