Correlation Between BNP Paribas and AXA SA
Can any of the company-specific risk be diversified away by investing in both BNP Paribas and AXA SA 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 AXA SA 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 AXA SA, you can compare the effects of market volatilities on BNP Paribas and AXA SA 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 AXA SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of BNP Paribas and AXA SA.
Diversification Opportunities for BNP Paribas and AXA SA
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between BNP and AXA is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding BNP Paribas SA and AXA SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AXA SA 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 AXA SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AXA SA has no effect on the direction of BNP Paribas i.e., BNP Paribas and AXA SA go up and down completely randomly.
Pair Corralation between BNP Paribas and AXA SA
Assuming the 90 days trading horizon BNP Paribas SA is expected to under-perform the AXA SA. In addition to that, BNP Paribas is 1.57 times more volatile than AXA SA. It trades about -0.31 of its total potential returns per unit of risk. AXA SA is currently generating about -0.11 per unit of volatility. If you would invest 3,511 in AXA SA on August 24, 2024 and sell it today you would lose (91.00) from holding AXA SA or give up 2.59% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
BNP Paribas SA vs. AXA SA
Performance |
| Timeline |
| BNP Paribas SA |
| AXA SA |
BNP Paribas and AXA SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BNP Paribas and AXA SA
The main advantage of trading using opposite BNP Paribas and AXA SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BNP Paribas position performs unexpectedly, AXA SA 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 AXA SA will offset losses from the drop in AXA SA'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 |
| AXA SA vs. BNP Paribas SA | AXA SA vs. Sanofi SA | AXA SA vs. Credit Agricole SA | AXA SA vs. Societe Generale 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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