Correlation Between BNP Paribas and Dom Development
Can any of the company-specific risk be diversified away by investing in both BNP Paribas and Dom Development 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 Dom Development into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BNP Paribas Bank and Dom Development SA, you can compare the effects of market volatilities on BNP Paribas and Dom Development 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 Dom Development. Check out your portfolio center. Please also check ongoing floating volatility patterns of BNP Paribas and Dom Development.
Diversification Opportunities for BNP Paribas and Dom Development
-0.77 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between BNP and Dom is -0.77. Overlapping area represents the amount of risk that can be diversified away by holding BNP Paribas Bank and Dom Development SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dom Development 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 Bank are associated (or correlated) with Dom Development. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dom Development SA has no effect on the direction of BNP Paribas i.e., BNP Paribas and Dom Development go up and down completely randomly.
Pair Corralation between BNP Paribas and Dom Development
Assuming the 90 days trading horizon BNP Paribas Bank is expected to under-perform the Dom Development. But the stock apears to be less risky and, when comparing its historical volatility, BNP Paribas Bank is 1.1 times less risky than Dom Development. The stock trades about -0.18 of its potential returns per unit of risk. The Dom Development SA is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest 18,700 in Dom Development SA on August 31, 2024 and sell it today you would earn a total of 1,000.00 from holding Dom Development SA or generate 5.35% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
BNP Paribas Bank vs. Dom Development SA
Performance |
| Timeline |
| BNP Paribas Bank |
| Dom Development SA |
BNP Paribas and Dom Development Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BNP Paribas and Dom Development
The main advantage of trading using opposite BNP Paribas and Dom Development positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BNP Paribas position performs unexpectedly, Dom Development 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 Dom Development will offset losses from the drop in Dom Development's long position.| BNP Paribas vs. UniCredit SpA | BNP Paribas vs. Santander Bank Polska | BNP Paribas vs. Bank Handlowy w | BNP Paribas vs. Bank Millennium SA |
| Dom Development vs. Intersport Polska SA | Dom Development vs. Carlson Investments SA | Dom Development vs. GreenX Metals | Dom Development vs. Medicalg |
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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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