Correlation Between BNP Paribas and Credit Agricole
Can any of the company-specific risk be diversified away by investing in both BNP Paribas and Credit Agricole 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 Credit Agricole 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 Credit Agricole SA, you can compare the effects of market volatilities on BNP Paribas and Credit Agricole 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 Credit Agricole. Check out your portfolio center. Please also check ongoing floating volatility patterns of BNP Paribas and Credit Agricole.
Diversification Opportunities for BNP Paribas and Credit Agricole
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between BNP and Credit is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding BNP Paribas SA and Credit Agricole SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Credit Agricole 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 SA are associated (or correlated) with Credit Agricole. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Credit Agricole SA has no effect on the direction of BNP Paribas i.e., BNP Paribas and Credit Agricole go up and down completely randomly.
Pair Corralation between BNP Paribas and Credit Agricole
Assuming the 90 days horizon BNP Paribas SA is expected to under-perform the Credit Agricole. In addition to that, BNP Paribas is 1.27 times more volatile than Credit Agricole SA. It trades about -0.35 of its total potential returns per unit of risk. Credit Agricole SA is currently generating about -0.32 per unit of volatility. If you would invest 758.00 in Credit Agricole SA on August 28, 2024 and sell it today you would lose (83.00) from holding Credit Agricole SA or give up 10.95% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
BNP Paribas SA vs. Credit Agricole SA
Performance |
| Timeline |
| BNP Paribas SA |
| Credit Agricole SA |
BNP Paribas and Credit Agricole Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BNP Paribas and Credit Agricole
The main advantage of trading using opposite BNP Paribas and Credit Agricole positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BNP Paribas position performs unexpectedly, Credit Agricole 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 Credit Agricole will offset losses from the drop in Credit Agricole's long position.The idea behind BNP Paribas SA and Credit Agricole 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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