Correlation Between BNP Paribas and Traditions Bank
Can any of the company-specific risk be diversified away by investing in both BNP Paribas and Traditions Bank 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 Traditions Bank 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 Traditions Bank, you can compare the effects of market volatilities on BNP Paribas and Traditions Bank 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 Traditions Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of BNP Paribas and Traditions Bank.
Diversification Opportunities for BNP Paribas and Traditions Bank
-0.49 | Correlation Coefficient |
Very good diversification
The 3 months correlation between BNP and Traditions is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding BNP Paribas SA and Traditions Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Traditions Bank 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 Traditions Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Traditions Bank has no effect on the direction of BNP Paribas i.e., BNP Paribas and Traditions Bank go up and down completely randomly.
Pair Corralation between BNP Paribas and Traditions Bank
Assuming the 90 days horizon BNP Paribas SA is expected to generate 0.83 times more return on investment than Traditions Bank. However, BNP Paribas SA is 1.21 times less risky than Traditions Bank. It trades about 0.31 of its potential returns per unit of risk. Traditions Bank is currently generating about 0.09 per unit of risk. If you would invest 3,073 in BNP Paribas SA on December 29, 2024 and sell it today you would earn a total of 1,178 from holding BNP Paribas SA or generate 38.33% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Very Weak |
Accuracy | 39.34% |
Values | Daily Returns |
BNP Paribas SA vs. Traditions Bank
Performance |
Timeline |
BNP Paribas SA |
Traditions Bank |
Risk-Adjusted Performance
OK
Weak | Strong |
BNP Paribas and Traditions Bank Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with BNP Paribas and Traditions Bank
The main advantage of trading using opposite BNP Paribas and Traditions Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BNP Paribas position performs unexpectedly, Traditions Bank 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 Traditions Bank will offset losses from the drop in Traditions Bank's long position.BNP Paribas vs. Societe Generale ADR | BNP Paribas vs. Intesa Sanpaolo SpA | BNP Paribas vs. Commerzbank AG PK | BNP Paribas vs. Swedbank AB |
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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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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