Correlation Between BNP Paribas and LSI Software
Can any of the company-specific risk be diversified away by investing in both BNP Paribas and LSI Software 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 LSI Software 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 LSI Software SA, you can compare the effects of market volatilities on BNP Paribas and LSI Software 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 LSI Software. Check out your portfolio center. Please also check ongoing floating volatility patterns of BNP Paribas and LSI Software.
Diversification Opportunities for BNP Paribas and LSI Software
-0.25 | Correlation Coefficient |
Very good diversification
The 3 months correlation between BNP and LSI is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding BNP Paribas Bank and LSI Software SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LSI Software 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 LSI Software. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LSI Software SA has no effect on the direction of BNP Paribas i.e., BNP Paribas and LSI Software go up and down completely randomly.
Pair Corralation between BNP Paribas and LSI Software
Assuming the 90 days trading horizon BNP Paribas Bank is expected to generate 0.97 times more return on investment than LSI Software. However, BNP Paribas Bank is 1.03 times less risky than LSI Software. It trades about 0.05 of its potential returns per unit of risk. LSI Software SA is currently generating about 0.05 per unit of risk. If you would invest 5,473 in BNP Paribas Bank on September 12, 2024 and sell it today you would earn a total of 2,727 from holding BNP Paribas Bank or generate 49.83% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.8% |
| Values | Daily Returns |
BNP Paribas Bank vs. LSI Software SA
Performance |
| Timeline |
| BNP Paribas Bank |
| LSI Software SA |
BNP Paribas and LSI Software Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BNP Paribas and LSI Software
The main advantage of trading using opposite BNP Paribas and LSI Software positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BNP Paribas position performs unexpectedly, LSI Software 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 LSI Software will offset losses from the drop in LSI Software's long position.| BNP Paribas vs. UniCredit SpA | BNP Paribas vs. Santander Bank Polska | BNP Paribas vs. Bank Polska Kasa | BNP Paribas vs. ING Bank lski |
| LSI Software vs. Skyline Investment SA | LSI Software vs. Immobile | LSI Software vs. Road Studio SA | LSI Software vs. MCI Management 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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