Correlation Between BNP Paribas and Nordea Bank
Can any of the company-specific risk be diversified away by investing in both BNP Paribas and Nordea Bank 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 Nordea Bank 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 Nordea Bank Abp, you can compare the effects of market volatilities on BNP Paribas and Nordea Bank 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 Nordea Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of BNP Paribas and Nordea Bank.
Diversification Opportunities for BNP Paribas and Nordea Bank
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between BNP and Nordea is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding BNP Paribas SA and Nordea Bank Abp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nordea Bank Abp 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 Nordea Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nordea Bank Abp has no effect on the direction of BNP Paribas i.e., BNP Paribas and Nordea Bank go up and down completely randomly.
Pair Corralation between BNP Paribas and Nordea Bank
Assuming the 90 days horizon BNP Paribas SA is expected to under-perform the Nordea Bank. In addition to that, BNP Paribas is 1.42 times more volatile than Nordea Bank Abp. It trades about -0.44 of its total potential returns per unit of risk. Nordea Bank Abp is currently generating about -0.22 per unit of volatility. If you would invest 1,176 in Nordea Bank Abp on August 26, 2024 and sell it today you would lose (66.00) from holding Nordea Bank Abp or give up 5.61% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
BNP Paribas SA vs. Nordea Bank Abp
Performance |
| Timeline |
| BNP Paribas SA |
| Nordea Bank Abp |
BNP Paribas and Nordea Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BNP Paribas and Nordea Bank
The main advantage of trading using opposite BNP Paribas and Nordea Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BNP Paribas position performs unexpectedly, Nordea Bank 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 Nordea Bank will offset losses from the drop in Nordea Bank'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 |
| Nordea Bank vs. United Overseas Bank | Nordea Bank vs. KBC Groep NV | Nordea Bank vs. Bank Mandiri Persero | Nordea Bank vs. Overseas Chinese Banking |
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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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