Correlation Between BNPP LC and BNPP EHY
Can any of the company-specific risk be diversified away by investing in both BNPP LC 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 LC 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 LC EURPAB and BNPP EHY SRI, you can compare the effects of market volatilities on BNPP LC 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 LC with a short position of BNPP EHY. Check out your portfolio center. Please also check ongoing floating volatility patterns of BNPP LC and BNPP EHY.
Diversification Opportunities for BNPP LC and BNPP EHY
Very good diversification
The 3 months correlation between BNPP and BNPP is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding BNPP LC EURPAB 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 LC 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 LC EURPAB 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 LC i.e., BNPP LC and BNPP EHY go up and down completely randomly.
Pair Corralation between BNPP LC and BNPP EHY
Assuming the 90 days trading horizon BNPP LC EURPAB is expected to generate 3.51 times more return on investment than BNPP EHY. However, BNPP LC is 3.51 times more volatile than BNPP EHY SRI. It trades about 0.0 of its potential returns per unit of risk. BNPP EHY SRI is currently generating about 0.0 per unit of risk. If you would invest 1,215 in BNPP LC EURPAB on October 9, 2024 and sell it today you would earn a total of 0.00 from holding BNPP LC EURPAB or generate 0.0% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
BNPP LC EURPAB vs. BNPP EHY SRI
Performance |
Timeline |
BNPP LC EURPAB |
BNPP EHY SRI |
BNPP LC and BNPP EHY Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with BNPP LC and BNPP EHY
The main advantage of trading using opposite BNPP LC and BNPP EHY positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BNPP LC 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.BNPP LC vs. BNPP BONDSRI ETF | BNPP LC vs. BNPP EHY SRI | BNPP LC vs. BNPP Greenbond ETF | BNPP LC vs. BNPP EHY SRI |
BNPP EHY vs. BNPP BONDSRI ETF | BNPP EHY vs. BNPP LC EURPAB | BNPP EHY vs. BNPP EHY SRI | BNPP EHY vs. BNPP Greenbond ETF |
Check out your portfolio center.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 Global Correlations module to find global opportunities by holding instruments from different markets.
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