Correlation Between Bitcoin and BNP Paribas

Can any of the company-specific risk be diversified away by investing in both Bitcoin and BNP Paribas 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 Bitcoin and BNP Paribas into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Bitcoin and BNP Paribas Easy, you can compare the effects of market volatilities on Bitcoin and BNP Paribas 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 Bitcoin with a short position of BNP Paribas. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bitcoin and BNP Paribas.

Diversification Opportunities for Bitcoin and BNP Paribas

0.74

Correlation Coefficient

Bitcoin  BNP Paribas

Poor diversification

The 3 months correlation between Bitcoin and BNP is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Bitcoin and BNP Paribas Easy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BNP Paribas Easy and Bitcoin 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 Bitcoin are associated (or correlated) with BNP Paribas. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BNP Paribas Easy has no effect on the direction of Bitcoin i.e., Bitcoin and BNP Paribas go up and down completely randomly.

Pair Corralation between Bitcoin and BNP Paribas

Assuming the 90 days trading horizon Bitcoin is expected to under-perform the BNP Paribas. In addition to that, Bitcoin is 2.13 times more volatile than BNP Paribas Easy. It trades about -0.07 of its total potential returns per unit of risk. BNP Paribas Easy is currently generating about -0.12 per unit of volatility. If you would invest  22,450  in BNP Paribas Easy on December 21, 2024 and sell it today you would lose (1,865) from holding BNP Paribas Easy or give up 8.31% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	96.83%
Values	Daily Returns

Bitcoin  vs.  BNP Paribas Easy

Bitcoin

Risk-Adjusted Performance

Very Weak

Over the last 90 days Bitcoin has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Crypto's fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for Bitcoin shareholders.

BNP Paribas Easy

Risk-Adjusted Performance

Very Weak

Over the last 90 days BNP Paribas Easy has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Etf's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the ETF investors.

Pair Trading with Bitcoin and BNP Paribas

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

The idea behind Bitcoin and BNP Paribas Easy 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.