Correlation Between BNP Paribas and Sanofi SA
Can any of the company-specific risk be diversified away by investing in both BNP Paribas and Sanofi 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 Sanofi 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 Sanofi SA, you can compare the effects of market volatilities on BNP Paribas and Sanofi 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 Sanofi SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of BNP Paribas and Sanofi SA.
Diversification Opportunities for BNP Paribas and Sanofi SA
0.49 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between BNP and Sanofi is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding BNP Paribas SA and Sanofi SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sanofi 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 Sanofi SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sanofi SA has no effect on the direction of BNP Paribas i.e., BNP Paribas and Sanofi SA go up and down completely randomly.
Pair Corralation between BNP Paribas and Sanofi SA
Assuming the 90 days trading horizon BNP Paribas SA is expected to generate 1.09 times more return on investment than Sanofi SA. However, BNP Paribas is 1.09 times more volatile than Sanofi SA. It trades about 0.04 of its potential returns per unit of risk. Sanofi SA is currently generating about 0.03 per unit of risk. If you would invest 4,582 in BNP Paribas SA on August 24, 2024 and sell it today you would earn a total of 1,110 from holding BNP Paribas SA or generate 24.23% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
BNP Paribas SA vs. Sanofi SA
Performance |
| Timeline |
| BNP Paribas SA |
| Sanofi SA |
BNP Paribas and Sanofi SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BNP Paribas and Sanofi SA
The main advantage of trading using opposite BNP Paribas and Sanofi SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BNP Paribas position performs unexpectedly, Sanofi 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 Sanofi SA will offset losses from the drop in Sanofi 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 |
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 Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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