Correlation Between FF Global and BNP Paribas

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

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

Diversification Opportunities for FF Global and BNP Paribas

-0.4

Correlation Coefficient

FF Global  BNP Paribas

Very good diversification

The 3 months correlation between FJ2P and BNP is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding FF 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 FF Global 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 FF 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 FF Global i.e., FF Global and BNP Paribas go up and down completely randomly.

Pair Corralation between FF Global and BNP Paribas

Assuming the 90 days trading horizon FF Global is expected to under-perform the BNP Paribas. In addition to that, FF Global is 1.31 times more volatile than BNP Paribas Midcap. It trades about -0.04 of its total potential returns per unit of risk. BNP Paribas Midcap is currently generating about -0.02 per unit of volatility. If you would invest  16,108  in BNP Paribas Midcap on October 15, 2024 and sell it today you would lose (31.00) from holding BNP Paribas Midcap or give up 0.19% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	87.5%
Values	Daily Returns

FF Global  vs.  BNP Paribas Midcap

FF Global

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in FF Global are ranked lower than 7 (%) of all funds and portfolios of funds over the last 90 days. In spite of rather weak technical and fundamental indicators, FF Global may actually be approaching a critical reversion point that can send shares even higher in February 2025.

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 FF Global and BNP Paribas

The main advantage of trading using opposite FF Global and BNP Paribas positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FF Global 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 FF 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.