Correlation Between BNP Paribas and Airbus Group
Can any of the company-specific risk be diversified away by investing in both BNP Paribas and Airbus Group 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 Airbus Group 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 Airbus Group SE, you can compare the effects of market volatilities on BNP Paribas and Airbus Group 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 Airbus Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of BNP Paribas and Airbus Group.
Diversification Opportunities for BNP Paribas and Airbus Group
0.02 | Correlation Coefficient |
Significant diversification
The 3 months correlation between BNP and Airbus is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding BNP Paribas SA and Airbus Group SE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Airbus Group SE 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 Airbus Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Airbus Group SE has no effect on the direction of BNP Paribas i.e., BNP Paribas and Airbus Group go up and down completely randomly.
Pair Corralation between BNP Paribas and Airbus Group
Assuming the 90 days trading horizon BNP Paribas is expected to generate 1.08 times less return on investment than Airbus Group. In addition to that, BNP Paribas is 1.15 times more volatile than Airbus Group SE. It trades about 0.04 of its total potential returns per unit of risk. Airbus Group SE is currently generating about 0.04 per unit of volatility. If you would invest 10,690 in Airbus Group SE on August 24, 2024 and sell it today you would earn a total of 3,104 from holding Airbus Group SE or generate 29.04% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
BNP Paribas SA vs. Airbus Group SE
Performance |
| Timeline |
| BNP Paribas SA |
| Airbus Group SE |
BNP Paribas and Airbus Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BNP Paribas and Airbus Group
The main advantage of trading using opposite BNP Paribas and Airbus Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BNP Paribas position performs unexpectedly, Airbus Group 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 Airbus Group will offset losses from the drop in Airbus Group's long position.| BNP Paribas vs. Societe Generale SA | BNP Paribas vs. Credit Agricole SA | BNP Paribas vs. AXA SA | BNP Paribas vs. Sanofi SA |
| Airbus Group vs. Safran SA | Airbus Group vs. LVMH Mot Hennessy | Airbus Group vs. BNP Paribas SA | Airbus Group vs. Air France KLM 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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.
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