Correlation Between BNP Paribas and Traditions Bank
Can any of the company-specific risk be diversified away by investing in both BNP Paribas and Traditions 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 Traditions 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 Traditions Bank, you can compare the effects of market volatilities on BNP Paribas and Traditions 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 Traditions Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of BNP Paribas and Traditions Bank.
Diversification Opportunities for BNP Paribas and Traditions Bank
-0.74 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between BNP and Traditions is -0.74. Overlapping area represents the amount of risk that can be diversified away by holding BNP Paribas SA and Traditions Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Traditions 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 Traditions Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Traditions Bank has no effect on the direction of BNP Paribas i.e., BNP Paribas and Traditions Bank go up and down completely randomly.
Pair Corralation between BNP Paribas and Traditions Bank
Assuming the 90 days horizon BNP Paribas SA is expected to under-perform the Traditions Bank. But the otc stock apears to be less risky and, when comparing its historical volatility, BNP Paribas SA is 3.45 times less risky than Traditions Bank. The otc stock trades about -0.1 of its potential returns per unit of risk. The Traditions Bank is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 1,686 in Traditions Bank on August 29, 2024 and sell it today you would earn a total of 1,813 from holding Traditions Bank or generate 107.53% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
BNP Paribas SA vs. Traditions Bank
Performance |
| Timeline |
| BNP Paribas SA |
| Traditions Bank |
BNP Paribas and Traditions Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BNP Paribas and Traditions Bank
The main advantage of trading using opposite BNP Paribas and Traditions Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BNP Paribas position performs unexpectedly, Traditions 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 Traditions Bank will offset losses from the drop in Traditions Bank's long position.| BNP Paribas vs. Invesco High Income | BNP Paribas vs. Blackrock Muniholdings Ny | BNP Paribas vs. Nuveen California Select | BNP Paribas vs. MFS Investment Grade |
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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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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