Correlation Between Carrefour and BNP Paribas
Can any of the company-specific risk be diversified away by investing in both Carrefour and BNP Paribas 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 Carrefour and BNP Paribas into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Carrefour SA and BNP Paribas SA, you can compare the effects of market volatilities on Carrefour and BNP Paribas 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 Carrefour with a short position of BNP Paribas. Check out your portfolio center. Please also check ongoing floating volatility patterns of Carrefour and BNP Paribas.
Diversification Opportunities for Carrefour and BNP Paribas
0.33 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Carrefour and BNP is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Carrefour SA and BNP Paribas SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BNP Paribas SA and Carrefour 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 Carrefour SA are associated (or correlated) with BNP Paribas. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BNP Paribas SA has no effect on the direction of Carrefour i.e., Carrefour and BNP Paribas go up and down completely randomly.
Pair Corralation between Carrefour and BNP Paribas
Assuming the 90 days horizon Carrefour SA is expected to under-perform the BNP Paribas. But the stock apears to be less risky and, when comparing its historical volatility, Carrefour SA is 1.11 times less risky than BNP Paribas. The stock trades about -0.01 of its potential returns per unit of risk. The BNP Paribas SA is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 5,341 in BNP Paribas SA on August 31, 2024 and sell it today you would earn a total of 323.00 from holding BNP Paribas SA or generate 6.05% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Carrefour SA vs. BNP Paribas SA
Performance |
| Timeline |
| Carrefour SA |
| BNP Paribas SA |
Carrefour and BNP Paribas Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Carrefour and BNP Paribas
The main advantage of trading using opposite Carrefour and BNP Paribas positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Carrefour position performs unexpectedly, BNP Paribas 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 BNP Paribas will offset losses from the drop in BNP Paribas' long position.| Carrefour vs. Danone SA | Carrefour vs. Renault SA | Carrefour vs. AXA SA | Carrefour vs. Compagnie de Saint Gobain |
| BNP Paribas vs. Societe Generale SA | BNP Paribas vs. Credit Agricole SA | BNP Paribas vs. AXA SA | BNP Paribas vs. Sanofi SA |
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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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