Correlation Between BNP Paribas and Bank of Utica

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

Diversification Opportunities for BNP Paribas and Bank of Utica

0.49

Correlation Coefficient

BNP Paribas  Bank of Utica

Very weak diversification

The 3 months correlation between BNP and Bank is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding BNP Paribas SA and Bank of Utica in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bank of Utica 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 Bank of Utica. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bank of Utica has no effect on the direction of BNP Paribas i.e., BNP Paribas and Bank of Utica go up and down completely randomly.

Pair Corralation between BNP Paribas and Bank of Utica

Assuming the 90 days horizon BNP Paribas SA is expected to generate 0.67 times more return on investment than Bank of Utica. However, BNP Paribas SA is 1.48 times less risky than Bank of Utica. It trades about 0.21 of its potential returns per unit of risk. Bank of Utica is currently generating about 0.09 per unit of risk. If you would invest  3,091  in BNP Paribas SA on November 20, 2024 and sell it today you would earn a total of  584.00  from holding BNP Paribas SA or generate 18.89% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	59.32%
Values	Daily Returns

BNP Paribas SA  vs.  Bank of Utica

BNP Paribas SA

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in BNP Paribas SA are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, BNP Paribas showed solid returns over the last few months and may actually be approaching a breakup point.

Bank of Utica

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Bank of Utica are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, Bank of Utica unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with BNP Paribas and Bank of Utica

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

The idea behind BNP Paribas SA and Bank of Utica 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 Anywhere module to track or share privately all of your investments from the convenience of any device.