Correlation Between LEGACY IRON and BNP Paribas
Can any of the company-specific risk be diversified away by investing in both LEGACY IRON 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 LEGACY IRON and BNP Paribas into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between LEGACY IRON ORE and BNP Paribas SA, you can compare the effects of market volatilities on LEGACY IRON 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 LEGACY IRON with a short position of BNP Paribas. Check out your portfolio center. Please also check ongoing floating volatility patterns of LEGACY IRON and BNP Paribas.
Diversification Opportunities for LEGACY IRON and BNP Paribas
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between LEGACY and BNP is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding LEGACY IRON ORE 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 LEGACY IRON 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 LEGACY IRON ORE 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 LEGACY IRON i.e., LEGACY IRON and BNP Paribas go up and down completely randomly.
Pair Corralation between LEGACY IRON and BNP Paribas
Assuming the 90 days trading horizon LEGACY IRON ORE is expected to under-perform the BNP Paribas. But the stock apears to be less risky and, when comparing its historical volatility, LEGACY IRON ORE is 2.34 times less risky than BNP Paribas. The stock trades about -0.07 of its potential returns per unit of risk. The BNP Paribas SA is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 5,447 in BNP Paribas SA on September 12, 2024 and sell it today you would earn a total of 535.00 from holding BNP Paribas SA or generate 9.82% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.7% |
| Values | Daily Returns |
LEGACY IRON ORE vs. BNP Paribas SA
Performance |
| Timeline |
| LEGACY IRON ORE |
| BNP Paribas SA |
LEGACY IRON and BNP Paribas Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LEGACY IRON and BNP Paribas
The main advantage of trading using opposite LEGACY IRON and BNP Paribas positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LEGACY IRON 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.| LEGACY IRON vs. RELIANCE STEEL AL | LEGACY IRON vs. BLUESCOPE STEEL | LEGACY IRON vs. BlueScope Steel Limited | LEGACY IRON vs. MAGNUM MINING EXP |
| BNP Paribas vs. LEGACY IRON ORE | BNP Paribas vs. Caseys General Stores | BNP Paribas vs. BLUESCOPE STEEL | BNP Paribas vs. Vastned Retail NV |
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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