Correlation Between BNP Paribas and SOFTWARE MANSION
Can any of the company-specific risk be diversified away by investing in both BNP Paribas and SOFTWARE MANSION 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 SOFTWARE MANSION 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 SOFTWARE MANSION SPOLKA, you can compare the effects of market volatilities on BNP Paribas and SOFTWARE MANSION 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 SOFTWARE MANSION. Check out your portfolio center. Please also check ongoing floating volatility patterns of BNP Paribas and SOFTWARE MANSION.
Diversification Opportunities for BNP Paribas and SOFTWARE MANSION
0.59 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between BNP and SOFTWARE is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding BNP Paribas Bank and SOFTWARE MANSION SPOLKA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SOFTWARE MANSION SPOLKA 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 SOFTWARE MANSION. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SOFTWARE MANSION SPOLKA has no effect on the direction of BNP Paribas i.e., BNP Paribas and SOFTWARE MANSION go up and down completely randomly.
Pair Corralation between BNP Paribas and SOFTWARE MANSION
Assuming the 90 days trading horizon BNP Paribas Bank is expected to under-perform the SOFTWARE MANSION. But the stock apears to be less risky and, when comparing its historical volatility, BNP Paribas Bank is 1.68 times less risky than SOFTWARE MANSION. The stock trades about -0.04 of its potential returns per unit of risk. The SOFTWARE MANSION SPOLKA is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 3,013 in SOFTWARE MANSION SPOLKA on September 3, 2024 and sell it today you would earn a total of 127.00 from holding SOFTWARE MANSION SPOLKA or generate 4.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.24% |
| Values | Daily Returns |
BNP Paribas Bank vs. SOFTWARE MANSION SPOLKA
Performance |
| Timeline |
| BNP Paribas Bank |
| SOFTWARE MANSION SPOLKA |
BNP Paribas and SOFTWARE MANSION Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BNP Paribas and SOFTWARE MANSION
The main advantage of trading using opposite BNP Paribas and SOFTWARE MANSION positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BNP Paribas position performs unexpectedly, SOFTWARE MANSION 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 SOFTWARE MANSION will offset losses from the drop in SOFTWARE MANSION's long position.| BNP Paribas vs. UniCredit SpA | BNP Paribas vs. Santander Bank Polska | BNP Paribas vs. Bank Polska Kasa | BNP Paribas vs. Bank Handlowy w |
| SOFTWARE MANSION vs. Mercator Medical SA | SOFTWARE MANSION vs. Quantum Software SA | SOFTWARE MANSION vs. Intersport Polska SA | SOFTWARE MANSION vs. LSI Software 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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