Correlation Between GreenX Metals and BNP Paribas

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

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

Diversification Opportunities for GreenX Metals and BNP Paribas

0.66

Correlation Coefficient

GreenX Metals  BNP Paribas

Poor diversification

The 3 months correlation between GreenX and BNP is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding GreenX Metals and BNP Paribas Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BNP Paribas Bank and GreenX Metals 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 GreenX Metals 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 Bank has no effect on the direction of GreenX Metals i.e., GreenX Metals and BNP Paribas go up and down completely randomly.

Pair Corralation between GreenX Metals and BNP Paribas

Assuming the 90 days trading horizon GreenX Metals is expected to generate 1.46 times more return on investment than BNP Paribas. However, GreenX Metals is 1.46 times more volatile than BNP Paribas Bank. It trades about 0.15 of its potential returns per unit of risk. BNP Paribas Bank is currently generating about 0.2 per unit of risk. If you would invest  168.00  in GreenX Metals on December 22, 2024 and sell it today you would earn a total of  42.00  from holding GreenX Metals or generate 25.0% return on investment over 90 days.

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

GreenX Metals  vs.  BNP Paribas Bank

GreenX Metals

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in GreenX Metals are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, GreenX Metals reported solid returns over the last few months and may actually be approaching a breakup point.

BNP Paribas Bank

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in BNP Paribas Bank are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, BNP Paribas reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with GreenX Metals and BNP Paribas

The main advantage of trading using opposite GreenX Metals and BNP Paribas positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GreenX Metals 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 GreenX Metals and BNP Paribas Bank 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 Managers module to screen money managers from public funds and ETFs managed around the world.