Correlation Between EasyETF BNP and BNP Paribas

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

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

Diversification Opportunities for EasyETF BNP and BNP Paribas

0.96

Correlation Coefficient

EasyETF BNP  BNP Paribas

Almost no diversification

The 3 months correlation between EasyETF and BNP is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding EasyETF BNP 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 EasyETF BNP 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 EasyETF BNP 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 EasyETF BNP i.e., EasyETF BNP and BNP Paribas go up and down completely randomly.

Pair Corralation between EasyETF BNP and BNP Paribas

Assuming the 90 days trading horizon EasyETF BNP is expected to under-perform the BNP Paribas. In addition to that, EasyETF BNP is 1.07 times more volatile than BNP Paribas Easy. It trades about -0.1 of its total potential returns per unit of risk. BNP Paribas Easy is currently generating about -0.07 per unit of volatility. If you would invest  1,957  in BNP Paribas Easy on December 26, 2024 and sell it today you would lose (84.00) from holding BNP Paribas Easy or give up 4.29% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	98.41%
Values	Daily Returns

EasyETF BNP  vs.  BNP Paribas Easy

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.

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 basic indicators, BNP Paribas is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with EasyETF BNP and BNP Paribas

The main advantage of trading using opposite EasyETF BNP and BNP Paribas positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if EasyETF BNP 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 EasyETF BNP 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.