Correlation Between Templeton Global and BNP Paribas

Can any of the company-specific risk be diversified away by investing in both Templeton 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 Templeton 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 Templeton Global AD and BNP Paribas Midcap, you can compare the effects of market volatilities on Templeton 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 Templeton Global with a short position of BNP Paribas. Check out your portfolio center. Please also check ongoing floating volatility patterns of Templeton Global and BNP Paribas.

Diversification Opportunities for Templeton Global and BNP Paribas

0.0

Correlation Coefficient

Templeton Global  BNP Paribas

Pay attention - limited upside

The 3 months correlation between Templeton and BNP is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Templeton Global AD 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 Templeton 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 Templeton Global AD 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 Templeton Global i.e., Templeton Global and BNP Paribas go up and down completely randomly.

Pair Corralation between Templeton Global and BNP Paribas

If you would invest (100.00) in BNP Paribas Midcap on October 4, 2024 and sell it today you would earn a total of  100.00  from holding BNP Paribas Midcap or generate -100.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Templeton Global AD  vs.  BNP Paribas Midcap

Templeton Global

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Templeton Global AD has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's technical and fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the fund shareholders.

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 Templeton Global and BNP Paribas

The main advantage of trading using opposite Templeton Global and BNP Paribas positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Templeton 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 Templeton Global AD 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.