Correlation Between BNP Paribas and TELECOM ITALIA
Can any of the company-specific risk be diversified away by investing in both BNP Paribas and TELECOM ITALIA 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 BNP Paribas and TELECOM ITALIA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BNP Paribas SA and TELECOM ITALIA, you can compare the effects of market volatilities on BNP Paribas and TELECOM ITALIA 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 BNP Paribas with a short position of TELECOM ITALIA. Check out your portfolio center. Please also check ongoing floating volatility patterns of BNP Paribas and TELECOM ITALIA.
Diversification Opportunities for BNP Paribas and TELECOM ITALIA
0.23 | Correlation Coefficient |
Modest diversification
The 3 months correlation between BNP and TELECOM is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding BNP Paribas SA and TELECOM ITALIA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TELECOM ITALIA and BNP Paribas 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 BNP Paribas SA are associated (or correlated) with TELECOM ITALIA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TELECOM ITALIA has no effect on the direction of BNP Paribas i.e., BNP Paribas and TELECOM ITALIA go up and down completely randomly.
Pair Corralation between BNP Paribas and TELECOM ITALIA
Assuming the 90 days horizon BNP Paribas is expected to generate 1.03 times less return on investment than TELECOM ITALIA. But when comparing it to its historical volatility, BNP Paribas SA is 1.78 times less risky than TELECOM ITALIA. It trades about 0.02 of its potential returns per unit of risk. TELECOM ITALIA is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 26.00 in TELECOM ITALIA on October 16, 2024 and sell it today you would earn a total of 0.00 from holding TELECOM ITALIA or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
BNP Paribas SA vs. TELECOM ITALIA
Performance |
| Timeline |
| BNP Paribas SA |
| TELECOM ITALIA |
BNP Paribas and TELECOM ITALIA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BNP Paribas and TELECOM ITALIA
The main advantage of trading using opposite BNP Paribas and TELECOM ITALIA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BNP Paribas position performs unexpectedly, TELECOM ITALIA 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 TELECOM ITALIA will offset losses from the drop in TELECOM ITALIA's long position.| BNP Paribas vs. TELECOM ITALIA | BNP Paribas vs. CITIC Telecom International | BNP Paribas vs. betterU Education Corp | BNP Paribas vs. ecotel communication ag |
| TELECOM ITALIA vs. BJs Wholesale Club | TELECOM ITALIA vs. MAG SILVER | TELECOM ITALIA vs. Perseus Mining Limited | TELECOM ITALIA vs. Eurasia Mining Plc |
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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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