Correlation Between Amazon and BNP Paribas
Can any of the company-specific risk be diversified away by investing in both Amazon 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 Amazon and BNP Paribas into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Amazon Inc and BNP Paribas SA, you can compare the effects of market volatilities on Amazon 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 Amazon with a short position of BNP Paribas. Check out your portfolio center. Please also check ongoing floating volatility patterns of Amazon and BNP Paribas.
Diversification Opportunities for Amazon and BNP Paribas
-0.62 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Amazon and BNP is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding Amazon Inc 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 Amazon 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 Amazon Inc 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 Amazon i.e., Amazon and BNP Paribas go up and down completely randomly.
Pair Corralation between Amazon and BNP Paribas
Assuming the 90 days trading horizon Amazon Inc is expected to generate 1.71 times more return on investment than BNP Paribas. However, Amazon is 1.71 times more volatile than BNP Paribas SA. It trades about 0.26 of its potential returns per unit of risk. BNP Paribas SA is currently generating about -0.32 per unit of risk. If you would invest 17,190 in Amazon Inc on September 1, 2024 and sell it today you would earn a total of 2,356 from holding Amazon Inc or generate 13.71% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Amazon Inc vs. BNP Paribas SA
Performance |
| Timeline |
| Amazon Inc |
| BNP Paribas SA |
Amazon and BNP Paribas Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Amazon and BNP Paribas
The main advantage of trading using opposite Amazon and BNP Paribas positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Amazon 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.| Amazon vs. CHINA OIL AND | Amazon vs. Strategic Investments AS | Amazon vs. QBE Insurance Group | Amazon vs. Japan Post Insurance |
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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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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