Correlation Between Granite 3x and BNP Paribas
Can any of the company-specific risk be diversified away by investing in both Granite 3x 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 Granite 3x and BNP Paribas into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Granite 3x LVMH and BNP Paribas Easy, you can compare the effects of market volatilities on Granite 3x 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 Granite 3x with a short position of BNP Paribas. Check out your portfolio center. Please also check ongoing floating volatility patterns of Granite 3x and BNP Paribas.
Diversification Opportunities for Granite 3x and BNP Paribas
0.45 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Granite and BNP is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Granite 3x LVMH and BNP Paribas Easy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BNP Paribas Easy and Granite 3x 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 Granite 3x LVMH 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 Easy has no effect on the direction of Granite 3x i.e., Granite 3x and BNP Paribas go up and down completely randomly.
Pair Corralation between Granite 3x and BNP Paribas
Assuming the 90 days trading horizon Granite 3x LVMH is expected to under-perform the BNP Paribas. In addition to that, Granite 3x is 4.04 times more volatile than BNP Paribas Easy. It trades about -0.04 of its total potential returns per unit of risk. BNP Paribas Easy is currently generating about 0.02 per unit of volatility. If you would invest 1,991 in BNP Paribas Easy on September 3, 2024 and sell it today you would earn a total of 239.00 from holding BNP Paribas Easy or generate 12.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 76.03% |
| Values | Daily Returns |
Granite 3x LVMH vs. BNP Paribas Easy
Performance |
| Timeline |
| Granite 3x LVMH |
| BNP Paribas Easy |
Granite 3x and BNP Paribas Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Granite 3x and BNP Paribas
The main advantage of trading using opposite Granite 3x and BNP Paribas positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Granite 3x 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 Granite 3x LVMH and BNP Paribas Easy 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.| BNP Paribas vs. Amundi Index Solutions | BNP Paribas vs. Manitou BF SA | BNP Paribas vs. Ossiam Minimum Variance | BNP Paribas vs. Granite 3x LVMH |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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