Correlation Between BNP Paribas and Farmers Bancorp
Can any of the company-specific risk be diversified away by investing in both BNP Paribas and Farmers Bancorp 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 Farmers Bancorp 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 Farmers Bancorp, you can compare the effects of market volatilities on BNP Paribas and Farmers Bancorp 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 Farmers Bancorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of BNP Paribas and Farmers Bancorp.
Diversification Opportunities for BNP Paribas and Farmers Bancorp
-0.64 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between BNP and Farmers is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding BNP Paribas SA and Farmers Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Farmers Bancorp 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 Farmers Bancorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Farmers Bancorp has no effect on the direction of BNP Paribas i.e., BNP Paribas and Farmers Bancorp go up and down completely randomly.
Pair Corralation between BNP Paribas and Farmers Bancorp
Assuming the 90 days horizon BNP Paribas SA is expected to generate 1.29 times more return on investment than Farmers Bancorp. However, BNP Paribas is 1.29 times more volatile than Farmers Bancorp. It trades about 0.01 of its potential returns per unit of risk. Farmers Bancorp is currently generating about -0.02 per unit of risk. If you would invest 5,980 in BNP Paribas SA on September 2, 2024 and sell it today you would earn a total of 56.00 from holding BNP Paribas SA or generate 0.94% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 78.1% |
| Values | Daily Returns |
BNP Paribas SA vs. Farmers Bancorp
Performance |
| Timeline |
| BNP Paribas SA |
| Farmers Bancorp |
BNP Paribas and Farmers Bancorp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BNP Paribas and Farmers Bancorp
The main advantage of trading using opposite BNP Paribas and Farmers Bancorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BNP Paribas position performs unexpectedly, Farmers Bancorp 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 Farmers Bancorp will offset losses from the drop in Farmers Bancorp'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 |
| Farmers Bancorp vs. First Farmers Financial | Farmers Bancorp vs. Farmers Merchants Bancorp | Farmers Bancorp vs. Lakeland Financial | Farmers Bancorp vs. Eagle Financial Services |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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