Correlation Between BNP Paribas and SouthPoint Bancshares

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

Diversification Opportunities for BNP Paribas and SouthPoint Bancshares

-0.82

Correlation Coefficient

BNP Paribas  SouthPoint Bancshares

Pay attention - limited upside

The 3 months correlation between BNP and SouthPoint is -0.82. Overlapping area represents the amount of risk that can be diversified away by holding BNP Paribas SA and SouthPoint Bancshares in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SouthPoint Bancshares 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 SouthPoint Bancshares. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SouthPoint Bancshares has no effect on the direction of BNP Paribas i.e., BNP Paribas and SouthPoint Bancshares go up and down completely randomly.

Pair Corralation between BNP Paribas and SouthPoint Bancshares

Assuming the 90 days horizon BNP Paribas SA is expected to under-perform the SouthPoint Bancshares. In addition to that, BNP Paribas is 1.57 times more volatile than SouthPoint Bancshares. It trades about -0.13 of its total potential returns per unit of risk. SouthPoint Bancshares is currently generating about 0.23 per unit of volatility. If you would invest  3,312  in SouthPoint Bancshares on September 16, 2024 and sell it today you would earn a total of  518.00  from holding SouthPoint Bancshares or generate 15.64% return on investment over 90 days.

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

BNP Paribas SA  vs.  SouthPoint Bancshares

BNP Paribas SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days BNP Paribas SA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

SouthPoint Bancshares

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in SouthPoint Bancshares are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, SouthPoint Bancshares sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with BNP Paribas and SouthPoint Bancshares

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

The idea behind BNP Paribas SA and SouthPoint Bancshares 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.