Correlation Between BNP Paribas and Societe Generale
Can any of the company-specific risk be diversified away by investing in both BNP Paribas and Societe Generale 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 Societe Generale 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 Societe Generale ADR, you can compare the effects of market volatilities on BNP Paribas and Societe Generale 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 Societe Generale. Check out your portfolio center. Please also check ongoing floating volatility patterns of BNP Paribas and Societe Generale.
Diversification Opportunities for BNP Paribas and Societe Generale
-0.46 | Correlation Coefficient |
Very good diversification
The 3 months correlation between BNP and Societe is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding BNP Paribas SA and Societe Generale ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Societe Generale ADR 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 Societe Generale. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Societe Generale ADR has no effect on the direction of BNP Paribas i.e., BNP Paribas and Societe Generale go up and down completely randomly.
Pair Corralation between BNP Paribas and Societe Generale
Assuming the 90 days horizon BNP Paribas SA is expected to under-perform the Societe Generale. In addition to that, BNP Paribas is 1.13 times more volatile than Societe Generale ADR. It trades about 0.0 of its total potential returns per unit of risk. Societe Generale ADR is currently generating about 0.01 per unit of volatility. If you would invest 529.00 in Societe Generale ADR on September 3, 2024 and sell it today you would earn a total of 6.00 from holding Societe Generale ADR or generate 1.13% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 89.47% |
| Values | Daily Returns |
BNP Paribas SA vs. Societe Generale ADR
Performance |
| Timeline |
| BNP Paribas SA |
| Societe Generale ADR |
BNP Paribas and Societe Generale Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BNP Paribas and Societe Generale
The main advantage of trading using opposite BNP Paribas and Societe Generale positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BNP Paribas position performs unexpectedly, Societe Generale 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 Societe Generale will offset losses from the drop in Societe Generale'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 |
| Societe Generale vs. BNP Paribas SA | Societe Generale vs. Credit Agricole SA | Societe Generale vs. Intesa Sanpaolo SpA | Societe Generale vs. Commerzbank AG PK |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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