Correlation Between AIB Group and BNP Paribas
Can any of the company-specific risk be diversified away by investing in both AIB Group 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 AIB Group and BNP Paribas into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AIB Group plc and BNP Paribas SA, you can compare the effects of market volatilities on AIB Group 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 AIB Group with a short position of BNP Paribas. Check out your portfolio center. Please also check ongoing floating volatility patterns of AIB Group and BNP Paribas.
Diversification Opportunities for AIB Group and BNP Paribas
0.91 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between AIB and BNP is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding AIB Group plc 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 AIB Group 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 AIB Group plc 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 AIB Group i.e., AIB Group and BNP Paribas go up and down completely randomly.
Pair Corralation between AIB Group and BNP Paribas
Assuming the 90 days horizon AIB Group is expected to generate 2.42 times less return on investment than BNP Paribas. In addition to that, AIB Group is 1.33 times more volatile than BNP Paribas SA. It trades about 0.08 of its total potential returns per unit of risk. BNP Paribas SA is currently generating about 0.26 per unit of volatility. If you would invest 7,104 in BNP Paribas SA on December 24, 2024 and sell it today you would earn a total of 870.00 from holding BNP Paribas SA or generate 12.25% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
AIB Group plc vs. BNP Paribas SA
Performance |
| Timeline |
| AIB Group plc |
| BNP Paribas SA |
AIB Group and BNP Paribas Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AIB Group and BNP Paribas
The main advantage of trading using opposite AIB Group and BNP Paribas positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AIB Group 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.| AIB Group vs. China Datang | AIB Group vs. FARM 51 GROUP | AIB Group vs. DATAGROUP SE | AIB Group vs. ALEFARM BREWING DK 05 |
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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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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