Correlation Between BNY Mellon and BNP Paribas

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

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

Diversification Opportunities for BNY Mellon and BNP Paribas

-0.68

Correlation Coefficient

BNY Mellon  BNP Paribas

Excellent diversification

The 3 months correlation between BNY and BNP is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding BNY Mellon Global and BNP Paribas Midcap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BNP Paribas Midcap and BNY Mellon 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 BNY Mellon Global 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 Midcap has no effect on the direction of BNY Mellon i.e., BNY Mellon and BNP Paribas go up and down completely randomly.

Pair Corralation between BNY Mellon and BNP Paribas

Assuming the 90 days trading horizon BNY Mellon Global is expected to under-perform the BNP Paribas. But the fund apears to be less risky and, when comparing its historical volatility, BNY Mellon Global is 1.8 times less risky than BNP Paribas. The fund trades about -0.26 of its potential returns per unit of risk. The BNP Paribas Midcap is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  15,869  in BNP Paribas Midcap on October 4, 2024 and sell it today you would earn a total of  113.00  from holding BNP Paribas Midcap or generate 0.71% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	94.74%
Values	Daily Returns

BNY Mellon Global  vs.  BNP Paribas Midcap

BNY Mellon Global

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in BNY Mellon Global are ranked lower than 2 (%) of all funds and portfolios of funds over the last 90 days. In spite of rather sound technical and fundamental indicators, BNY Mellon is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

BNP Paribas Midcap

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days BNP Paribas Midcap has generated negative risk-adjusted returns adding no value to fund investors. Despite fairly strong basic indicators, BNP Paribas is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with BNY Mellon and BNP Paribas

The main advantage of trading using opposite BNY Mellon and BNP Paribas positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BNY Mellon 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 BNY Mellon Global and BNP Paribas Midcap 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.