Correlation Between BNP Paribas and Banco Do
Can any of the company-specific risk be diversified away by investing in both BNP Paribas and Banco Do 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 Banco Do 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 Banco Do Brasil, you can compare the effects of market volatilities on BNP Paribas and Banco Do 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 Banco Do. Check out your portfolio center. Please also check ongoing floating volatility patterns of BNP Paribas and Banco Do.
Diversification Opportunities for BNP Paribas and Banco Do
0.57 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between BNP and Banco is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding BNP Paribas SA and Banco Do Brasil in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Banco Do Brasil 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 Banco Do. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Banco Do Brasil has no effect on the direction of BNP Paribas i.e., BNP Paribas and Banco Do go up and down completely randomly.
Pair Corralation between BNP Paribas and Banco Do
Assuming the 90 days horizon BNP Paribas SA is expected to under-perform the Banco Do. In addition to that, BNP Paribas is 1.06 times more volatile than Banco Do Brasil. It trades about -0.51 of its total potential returns per unit of risk. Banco Do Brasil is currently generating about -0.14 per unit of volatility. If you would invest 462.00 in Banco Do Brasil on August 28, 2024 and sell it today you would lose (22.00) from holding Banco Do Brasil or give up 4.76% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
BNP Paribas SA vs. Banco Do Brasil
Performance |
| Timeline |
| BNP Paribas SA |
| Banco Do Brasil |
BNP Paribas and Banco Do Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BNP Paribas and Banco Do
The main advantage of trading using opposite BNP Paribas and Banco Do positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BNP Paribas position performs unexpectedly, Banco Do 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 Banco Do will offset losses from the drop in Banco Do's long position.| BNP Paribas vs. Societe Generale ADR | BNP Paribas vs. Intesa Sanpaolo SpA | BNP Paribas vs. Commerzbank AG PK | BNP Paribas vs. Swedbank AB |
| Banco Do vs. BB Seguridade Participacoes | Banco Do vs. Banco Santander Brasil | Banco Do vs. Centrais Electricas Brasileiras | Banco Do vs. Itau Unibanco Banco |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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