Correlation Between Grupo Aval and BNP Paribas
Can any of the company-specific risk be diversified away by investing in both Grupo Aval 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 Grupo Aval and BNP Paribas into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Grupo Aval Acciones and BNP Paribas SA, you can compare the effects of market volatilities on Grupo Aval 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 Grupo Aval with a short position of BNP Paribas. Check out your portfolio center. Please also check ongoing floating volatility patterns of Grupo Aval and BNP Paribas.
Diversification Opportunities for Grupo Aval and BNP Paribas
-0.58 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Grupo and BNP is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding Grupo Aval Acciones 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 Grupo Aval 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 Grupo Aval Acciones 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 Grupo Aval i.e., Grupo Aval and BNP Paribas go up and down completely randomly.
Pair Corralation between Grupo Aval and BNP Paribas
Assuming the 90 days trading horizon Grupo Aval Acciones is expected to generate 1.11 times more return on investment than BNP Paribas. However, Grupo Aval is 1.11 times more volatile than BNP Paribas SA. It trades about -0.03 of its potential returns per unit of risk. BNP Paribas SA is currently generating about -0.08 per unit of risk. If you would invest 207.00 in Grupo Aval Acciones on September 1, 2024 and sell it today you would lose (16.00) from holding Grupo Aval Acciones or give up 7.73% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Grupo Aval Acciones vs. BNP Paribas SA
Performance |
| Timeline |
| Grupo Aval Acciones |
| BNP Paribas SA |
Grupo Aval and BNP Paribas Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Grupo Aval and BNP Paribas
The main advantage of trading using opposite Grupo Aval and BNP Paribas positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Grupo Aval 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.| Grupo Aval vs. Nucletron Electronic Aktiengesellschaft | Grupo Aval vs. UET United Electronic | Grupo Aval vs. Arrow Electronics | Grupo Aval vs. Renesas Electronics |
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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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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