Correlation Between BNP Paribas and Israel Discount

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Can any of the company-specific risk be diversified away by investing in both BNP Paribas and Israel Discount 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 Israel Discount 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 Israel Discount Bank, you can compare the effects of market volatilities on BNP Paribas and Israel Discount 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 Israel Discount. Check out your portfolio center. Please also check ongoing floating volatility patterns of BNP Paribas and Israel Discount.

Diversification Opportunities for BNP Paribas and Israel Discount

-0.45
  Correlation Coefficient

Very good diversification

The 3 months correlation between BNP and Israel is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding BNP Paribas SA and Israel Discount Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Israel Discount Bank 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 Israel Discount. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Israel Discount Bank has no effect on the direction of BNP Paribas i.e., BNP Paribas and Israel Discount go up and down completely randomly.

Pair Corralation between BNP Paribas and Israel Discount

Assuming the 90 days horizon BNP Paribas is expected to generate 2.2 times less return on investment than Israel Discount. But when comparing it to its historical volatility, BNP Paribas SA is 1.39 times less risky than Israel Discount. It trades about 0.03 of its potential returns per unit of risk. Israel Discount Bank is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  4,804  in Israel Discount Bank on October 21, 2024 and sell it today you would earn a total of  1,396  from holding Israel Discount Bank or generate 29.06% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthVery Weak
Accuracy90.7%
ValuesDaily Returns

BNP Paribas SA  vs.  Israel Discount Bank

 Performance 
       Timeline  
BNP Paribas SA 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days BNP Paribas SA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.
Israel Discount Bank 

Risk-Adjusted Performance

4 of 100

 
Weak
 
Strong
Insignificant
Compared to the overall equity markets, risk-adjusted returns on investments in Israel Discount Bank are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating basic indicators, Israel Discount may actually be approaching a critical reversion point that can send shares even higher in February 2025.

BNP Paribas and Israel Discount Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with BNP Paribas and Israel Discount

The main advantage of trading using opposite BNP Paribas and Israel Discount positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BNP Paribas position performs unexpectedly, Israel Discount 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 Israel Discount will offset losses from the drop in Israel Discount's long position.
The idea behind BNP Paribas SA and Israel Discount Bank 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.
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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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.

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