Correlation Between BNP Paribas and MCI Management
Can any of the company-specific risk be diversified away by investing in both BNP Paribas and MCI Management 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 MCI Management 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 MCI Management SA, you can compare the effects of market volatilities on BNP Paribas and MCI Management 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 MCI Management. Check out your portfolio center. Please also check ongoing floating volatility patterns of BNP Paribas and MCI Management.
Diversification Opportunities for BNP Paribas and MCI Management
-0.51 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between BNP and MCI is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding BNP Paribas Bank and MCI Management SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MCI Management 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 MCI Management. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MCI Management SA has no effect on the direction of BNP Paribas i.e., BNP Paribas and MCI Management go up and down completely randomly.
Pair Corralation between BNP Paribas and MCI Management
Assuming the 90 days trading horizon BNP Paribas is expected to generate 1.12 times less return on investment than MCI Management. In addition to that, BNP Paribas is 1.01 times more volatile than MCI Management SA. It trades about 0.05 of its total potential returns per unit of risk. MCI Management SA is currently generating about 0.06 per unit of volatility. If you would invest 1,620 in MCI Management SA on August 28, 2024 and sell it today you would earn a total of 970.00 from holding MCI Management SA or generate 59.88% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
BNP Paribas Bank vs. MCI Management SA
Performance |
| Timeline |
| BNP Paribas Bank |
| MCI Management SA |
BNP Paribas and MCI Management Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BNP Paribas and MCI Management
The main advantage of trading using opposite BNP Paribas and MCI Management positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BNP Paribas position performs unexpectedly, MCI Management 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 MCI Management will offset losses from the drop in MCI Management's long position.The idea behind BNP Paribas Bank and MCI Management SA pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.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 Global Correlations module to find global opportunities by holding instruments from different markets.
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