Correlation Between Credit Agricole and BNP Paribas
Can any of the company-specific risk be diversified away by investing in both Credit Agricole 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 Credit Agricole and BNP Paribas into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Credit Agricole SA and BNP Paribas SA, you can compare the effects of market volatilities on Credit Agricole 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 Credit Agricole with a short position of BNP Paribas. Check out your portfolio center. Please also check ongoing floating volatility patterns of Credit Agricole and BNP Paribas.
Diversification Opportunities for Credit Agricole and BNP Paribas
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Credit and BNP is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Credit Agricole SA 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 Credit Agricole 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 Credit Agricole SA 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 Credit Agricole i.e., Credit Agricole and BNP Paribas go up and down completely randomly.
Pair Corralation between Credit Agricole and BNP Paribas
Assuming the 90 days trading horizon Credit Agricole SA is expected to generate 0.76 times more return on investment than BNP Paribas. However, Credit Agricole SA is 1.31 times less risky than BNP Paribas. It trades about 0.09 of its potential returns per unit of risk. BNP Paribas SA is currently generating about 0.04 per unit of risk. If you would invest 796.00 in Credit Agricole SA on August 28, 2024 and sell it today you would earn a total of 497.00 from holding Credit Agricole SA or generate 62.44% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Credit Agricole SA vs. BNP Paribas SA
Performance |
| Timeline |
| Credit Agricole SA |
| BNP Paribas SA |
Credit Agricole and BNP Paribas Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Credit Agricole and BNP Paribas
The main advantage of trading using opposite Credit Agricole and BNP Paribas positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Credit Agricole 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.| Credit Agricole vs. Societe Generale SA | Credit Agricole vs. BNP Paribas SA | Credit Agricole vs. AXA SA | Credit Agricole vs. Orange SA |
| BNP Paribas vs. Societe Generale SA | BNP Paribas vs. Credit Agricole SA | BNP Paribas vs. AXA SA | BNP Paribas vs. Sanofi SA |
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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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