Correlation Between BNPP BONDSRI and BNPP Greenbond

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

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

Diversification Opportunities for BNPP BONDSRI and BNPP Greenbond

0.95

Correlation Coefficient

BNPP BONDSRI  BNPP Greenbond

Almost no diversification

The 3 months correlation between BNPP and BNPP is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding BNPP BONDSRI ETF and BNPP Greenbond ETF in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BNPP Greenbond ETF and BNPP BONDSRI 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 BONDSRI ETF are associated (or correlated) with BNPP Greenbond. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BNPP Greenbond ETF has no effect on the direction of BNPP BONDSRI i.e., BNPP BONDSRI and BNPP Greenbond go up and down completely randomly.

Pair Corralation between BNPP BONDSRI and BNPP Greenbond

Assuming the 90 days trading horizon BNPP BONDSRI ETF is expected to generate 0.69 times more return on investment than BNPP Greenbond. However, BNPP BONDSRI ETF is 1.46 times less risky than BNPP Greenbond. It trades about 0.1 of its potential returns per unit of risk. BNPP Greenbond ETF is currently generating about 0.03 per unit of risk. If you would invest  938.00  in BNPP BONDSRI ETF on October 8, 2024 and sell it today you would earn a total of  10.00  from holding BNPP BONDSRI ETF or generate 1.07% return on investment over 90 days.

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

BNPP BONDSRI ETF  vs.  BNPP Greenbond ETF

BNPP BONDSRI ETF

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in BNPP BONDSRI ETF are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable basic indicators, BNPP BONDSRI is not utilizing all of its potentials. The newest stock price agitation, may contribute to short-term losses for the retail investors.

BNPP Greenbond ETF

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in BNPP Greenbond ETF are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. 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.

Pair Trading with BNPP BONDSRI and BNPP Greenbond

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

The idea behind BNPP BONDSRI ETF and BNPP Greenbond ETF 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.