Correlation Between Taylor Calvin and BNP Paribas

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

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

Diversification Opportunities for Taylor Calvin and BNP Paribas

0.43

Correlation Coefficient

Taylor Calvin  BNP Paribas

Very weak diversification

The 3 months correlation between Taylor and BNP is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Taylor Calvin B and BNP Paribas SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BNP Paribas SA and Taylor Calvin 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 Taylor Calvin B 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 SA has no effect on the direction of Taylor Calvin i.e., Taylor Calvin and BNP Paribas go up and down completely randomly.

Pair Corralation between Taylor Calvin and BNP Paribas

Given the investment horizon of 90 days Taylor Calvin B is expected to generate 0.93 times more return on investment than BNP Paribas. However, Taylor Calvin B is 1.07 times less risky than BNP Paribas. It trades about -0.01 of its potential returns per unit of risk. BNP Paribas SA is currently generating about -0.17 per unit of risk. If you would invest  4,850  in Taylor Calvin B on September 26, 2024 and sell it today you would lose (50.00) from holding Taylor Calvin B or give up 1.03% of portfolio value over 90 days.

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

Taylor Calvin B  vs.  BNP Paribas SA

Taylor Calvin B

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Taylor Calvin B has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong fundamental indicators, Taylor Calvin is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

BNP Paribas SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days BNP Paribas SA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Taylor Calvin and BNP Paribas

The main advantage of trading using opposite Taylor Calvin and BNP Paribas positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Taylor Calvin 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 Taylor Calvin B and BNP Paribas SA 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.

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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.