Correlation Between BNP Paribas and EasyETF BNP

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

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

Diversification Opportunities for BNP Paribas and EasyETF BNP

0.95

Correlation Coefficient

BNP Paribas  EasyETF BNP

Almost no diversification

The 3 months correlation between BNP and EasyETF is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding BNP Paribas Easy and EasyETF BNP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EasyETF BNP 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 Easy 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 BNP Paribas i.e., BNP Paribas and EasyETF BNP go up and down completely randomly.

Pair Corralation between BNP Paribas and EasyETF BNP

Assuming the 90 days trading horizon BNP Paribas Easy is expected to generate 0.95 times more return on investment than EasyETF BNP. However, BNP Paribas Easy is 1.05 times less risky than EasyETF BNP. It trades about -0.08 of its potential returns per unit of risk. EasyETF BNP is currently generating about -0.14 per unit of risk. If you would invest  2,382  in BNP Paribas Easy on December 20, 2024 and sell it today you would lose (113.00) from holding BNP Paribas Easy or give up 4.74% of portfolio value over 90 days.

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

BNP Paribas Easy  vs.  EasyETF BNP

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 somewhat strong fundamental indicators, BNP Paribas is not utilizing all of its potentials. The latest 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 BNP Paribas and EasyETF BNP

The main advantage of trading using opposite BNP Paribas and EasyETF BNP positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BNP Paribas 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 BNP Paribas Easy 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.