Correlation Between BNP Paribas and Bank of Ireland
Can any of the company-specific risk be diversified away by investing in both BNP Paribas and Bank of Ireland 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 Bank of Ireland 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 Bank of Ireland, you can compare the effects of market volatilities on BNP Paribas and Bank of Ireland 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 Bank of Ireland. Check out your portfolio center. Please also check ongoing floating volatility patterns of BNP Paribas and Bank of Ireland.
Diversification Opportunities for BNP Paribas and Bank of Ireland
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between BNP and Bank is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding BNP Paribas SA and Bank of Ireland in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bank of Ireland 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 Bank of Ireland. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bank of Ireland has no effect on the direction of BNP Paribas i.e., BNP Paribas and Bank of Ireland go up and down completely randomly.
Pair Corralation between BNP Paribas and Bank of Ireland
Assuming the 90 days horizon BNP Paribas SA is expected to generate 0.65 times more return on investment than Bank of Ireland. However, BNP Paribas SA is 1.55 times less risky than Bank of Ireland. It trades about 0.3 of its potential returns per unit of risk. Bank of Ireland is currently generating about 0.01 per unit of risk. If you would invest 6,190 in BNP Paribas SA on November 6, 2024 and sell it today you would earn a total of 660.00 from holding BNP Paribas SA or generate 10.66% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 94.74% |
| Values | Daily Returns |
BNP Paribas SA vs. Bank of Ireland
Performance |
| Timeline |
| BNP Paribas SA |
| Bank of Ireland |
BNP Paribas and Bank of Ireland Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BNP Paribas and Bank of Ireland
The main advantage of trading using opposite BNP Paribas and Bank of Ireland positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BNP Paribas position performs unexpectedly, Bank of Ireland 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 Bank of Ireland will offset losses from the drop in Bank of Ireland's long position.| BNP Paribas vs. Lloyds Banking Group | BNP Paribas vs. Bank of Hawaii | BNP Paribas vs. Deutsche Bank AG | BNP Paribas vs. PNC Financial Services |
| Bank of Ireland vs. Alpha Bank SA | Bank of Ireland vs. National Bank of | Bank of Ireland vs. Piraeus Bank SA | Bank of Ireland vs. United Bancorp |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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