Correlation Between Deka EURO and BNP Paribas

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

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

Diversification Opportunities for Deka EURO and BNP Paribas

-0.73

Correlation Coefficient

Deka EURO  BNP Paribas

Pay attention - limited upside

The 3 months correlation between Deka and BNP is -0.73. Overlapping area represents the amount of risk that can be diversified away by holding Deka EURO STOXX 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 Deka EURO 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 Deka EURO STOXX 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 Deka EURO i.e., Deka EURO and BNP Paribas go up and down completely randomly.

Pair Corralation between Deka EURO and BNP Paribas

Assuming the 90 days trading horizon Deka EURO STOXX is expected to under-perform the BNP Paribas. But the etf apears to be less risky and, when comparing its historical volatility, Deka EURO STOXX is 1.39 times less risky than BNP Paribas. The etf trades about -0.03 of its potential returns per unit of risk. The BNP Paribas Easy is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest  2,616  in BNP Paribas Easy on October 7, 2024 and sell it today you would earn a total of  250.00  from holding BNP Paribas Easy or generate 9.56% return on investment over 90 days.

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

Deka EURO STOXX  vs.  BNP Paribas Easy

Deka EURO STOXX

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Deka EURO STOXX has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Deka EURO is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

BNP Paribas Easy

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in BNP Paribas Easy are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady technical and fundamental indicators, BNP Paribas may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Deka EURO and BNP Paribas

The main advantage of trading using opposite Deka EURO and BNP Paribas positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Deka EURO 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 Deka EURO STOXX 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.