Correlation Between BNPP Greenbond and BNPP EHY

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

By analyzing existing cross correlation between BNPP Greenbond ETF and BNPP EHY SRI, you can compare the effects of market volatilities on BNPP Greenbond and BNPP EHY 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 BNPP Greenbond with a short position of BNPP EHY. Check out your portfolio center. Please also check ongoing floating volatility patterns of BNPP Greenbond and BNPP EHY.

Diversification Opportunities for BNPP Greenbond and BNPP EHY

0.5

Correlation Coefficient

BNPP Greenbond  BNPP EHY

Very weak diversification

The 3 months correlation between BNPP and BNPP is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding BNPP Greenbond ETF and BNPP EHY SRI in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BNPP EHY SRI and BNPP Greenbond 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 BNPP Greenbond ETF are associated (or correlated) with BNPP EHY. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BNPP EHY SRI has no effect on the direction of BNPP Greenbond i.e., BNPP Greenbond and BNPP EHY go up and down completely randomly.

Pair Corralation between BNPP Greenbond and BNPP EHY

Assuming the 90 days trading horizon BNPP Greenbond is expected to generate 1.41 times less return on investment than BNPP EHY. In addition to that, BNPP Greenbond is 1.13 times more volatile than BNPP EHY SRI. It trades about 0.03 of its total potential returns per unit of risk. BNPP EHY SRI is currently generating about 0.04 per unit of volatility. If you would invest  867.00  in BNPP EHY SRI on October 24, 2024 and sell it today you would earn a total of  70.00  from holding BNPP EHY SRI or generate 8.07% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	99.4%
Values	Daily Returns

BNPP Greenbond ETF  vs.  BNPP EHY SRI

BNPP Greenbond ETF

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days BNPP Greenbond ETF has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, BNPP Greenbond is not utilizing all of its potentials. The newest stock price agitation, may contribute to short-term losses for the retail investors.

BNPP EHY SRI

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in BNPP EHY SRI are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable basic indicators, BNPP EHY is not utilizing all of its potentials. The newest stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with BNPP Greenbond and BNPP EHY

The main advantage of trading using opposite BNPP Greenbond and BNPP EHY positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BNPP Greenbond position performs unexpectedly, BNPP EHY 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 BNPP EHY will offset losses from the drop in BNPP EHY's long position.

The idea behind BNPP Greenbond ETF and BNPP EHY SRI 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.