Correlation Between Amundi SP and EasyETF BNP

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

By analyzing existing cross correlation between Amundi SP 500 and EasyETF BNP, you can compare the effects of market volatilities on Amundi SP and EasyETF BNP 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 Amundi SP with a short position of EasyETF BNP. Check out your portfolio center. Please also check ongoing floating volatility patterns of Amundi SP and EasyETF BNP.

Diversification Opportunities for Amundi SP and EasyETF BNP

0.8

Correlation Coefficient

Amundi SP  EasyETF BNP

Very poor diversification

The 3 months correlation between Amundi and EasyETF is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Amundi SP 500 and EasyETF BNP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EasyETF BNP and Amundi SP 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 Amundi SP 500 are associated (or correlated) with EasyETF BNP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EasyETF BNP has no effect on the direction of Amundi SP i.e., Amundi SP and EasyETF BNP go up and down completely randomly.

Pair Corralation between Amundi SP and EasyETF BNP

Assuming the 90 days trading horizon Amundi SP 500 is expected to generate 0.86 times more return on investment than EasyETF BNP. However, Amundi SP 500 is 1.17 times less risky than EasyETF BNP. It trades about -0.03 of its potential returns per unit of risk. EasyETF BNP is currently generating about -0.13 per unit of risk. If you would invest  31,350  in Amundi SP 500 on December 22, 2024 and sell it today you would lose (560.00) from holding Amundi SP 500 or give up 1.79% of portfolio value over 90 days.

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

Amundi SP 500  vs.  EasyETF BNP

Amundi SP 500

Risk-Adjusted Performance

Very Weak

Over the last 90 days Amundi SP 500 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Amundi SP is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

EasyETF BNP

Risk-Adjusted Performance

Very Weak

Over the last 90 days EasyETF BNP has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Etf's technical and fundamental 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 Amundi SP and EasyETF BNP

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

The idea behind Amundi SP 500 and EasyETF BNP 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.