Correlation Between BNP Paribas and Crédit Agricole
Can any of the company-specific risk be diversified away by investing in both BNP Paribas and Crédit 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 Crédit 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 Crdit Agricole SA, you can compare the effects of market volatilities on BNP Paribas and Crédit 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 Crédit Agricole. Check out your portfolio center. Please also check ongoing floating volatility patterns of BNP Paribas and Crédit Agricole.
Diversification Opportunities for BNP Paribas and Crédit Agricole
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between BNP and Crédit is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding BNP Paribas SA and Crdit Agricole SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Crdit 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 Crédit Agricole. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Crdit Agricole SA has no effect on the direction of BNP Paribas i.e., BNP Paribas and Crédit Agricole go up and down completely randomly.
Pair Corralation between BNP Paribas and Crédit Agricole
Assuming the 90 days horizon BNP Paribas SA is expected to under-perform the Crédit Agricole. But the otc stock apears to be less risky and, when comparing its historical volatility, BNP Paribas SA is 1.39 times less risky than Crédit Agricole. The otc stock trades about -0.26 of its potential returns per unit of risk. The Crdit Agricole SA is currently generating about -0.1 of returns per unit of risk over similar time horizon. If you would invest 1,514 in Crdit Agricole SA on August 27, 2024 and sell it today you would lose (136.00) from holding Crdit Agricole SA or give up 8.98% 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. Crdit Agricole SA
Performance |
| Timeline |
| BNP Paribas SA |
| Crdit Agricole SA |
BNP Paribas and Crédit Agricole Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BNP Paribas and Crédit Agricole
The main advantage of trading using opposite BNP Paribas and Crédit Agricole positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BNP Paribas position performs unexpectedly, Crédit 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 Crédit Agricole will offset losses from the drop in Crédit Agricole's long position.| BNP Paribas vs. Invesco High Income | BNP Paribas vs. Blackrock Muniholdings Ny | BNP Paribas vs. MFS Investment Grade | BNP Paribas vs. Federated Premier Municipal |
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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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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