Correlation Between BNP Paribas and Community Heritage
Can any of the company-specific risk be diversified away by investing in both BNP Paribas and Community Heritage 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 Community Heritage 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 Community Heritage Financial, you can compare the effects of market volatilities on BNP Paribas and Community Heritage 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 Community Heritage. Check out your portfolio center. Please also check ongoing floating volatility patterns of BNP Paribas and Community Heritage.
Diversification Opportunities for BNP Paribas and Community Heritage
-0.38 | Correlation Coefficient |
Very good diversification
The 3 months correlation between BNP and Community is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding BNP Paribas SA and Community Heritage Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Community Heritage 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 Community Heritage. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Community Heritage has no effect on the direction of BNP Paribas i.e., BNP Paribas and Community Heritage go up and down completely randomly.
Pair Corralation between BNP Paribas and Community Heritage
Assuming the 90 days horizon BNP Paribas SA is expected to generate 3.95 times more return on investment than Community Heritage. However, BNP Paribas is 3.95 times more volatile than Community Heritage Financial. It trades about 0.3 of its potential returns per unit of risk. Community Heritage Financial is currently generating about 0.35 per unit of risk. If you would invest 6,190 in BNP Paribas SA on November 5, 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 Against |
| Strength | Insignificant |
| Accuracy | 90.0% |
| Values | Daily Returns |
BNP Paribas SA vs. Community Heritage Financial
Performance |
| Timeline |
| BNP Paribas SA |
| Community Heritage |
BNP Paribas and Community Heritage Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BNP Paribas and Community Heritage
The main advantage of trading using opposite BNP Paribas and Community Heritage positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BNP Paribas position performs unexpectedly, Community Heritage 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 Community Heritage will offset losses from the drop in Community Heritage'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 |
| Community Heritage vs. National Capital Bank | Community Heritage vs. Citizens Financial Corp | Community Heritage vs. North Dallas Bank | Community Heritage vs. Lewis Clark 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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