Correlation Between IShares Core and BNP Paribas
Can any of the company-specific risk be diversified away by investing in both IShares Core 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 IShares Core and BNP Paribas into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between iShares Core SP and BNP Paribas Easy, you can compare the effects of market volatilities on IShares Core 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 IShares Core with a short position of BNP Paribas. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Core and BNP Paribas.
Diversification Opportunities for IShares Core and BNP Paribas
-0.24 | Correlation Coefficient |
Very good diversification
The 3 months correlation between IShares and BNP is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding iShares Core SP and BNP Paribas Easy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BNP Paribas Easy and IShares Core 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 iShares Core SP 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 Easy has no effect on the direction of IShares Core i.e., IShares Core and BNP Paribas go up and down completely randomly.
Pair Corralation between IShares Core and BNP Paribas
Assuming the 90 days trading horizon iShares Core SP is expected to generate 1.2 times more return on investment than BNP Paribas. However, IShares Core is 1.2 times more volatile than BNP Paribas Easy. It trades about 0.14 of its potential returns per unit of risk. BNP Paribas Easy is currently generating about -0.06 per unit of risk. If you would invest 59,720 in iShares Core SP on September 2, 2024 and sell it today you would earn a total of 4,240 from holding iShares Core SP or generate 7.1% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
iShares Core SP vs. BNP Paribas Easy
Performance |
| Timeline |
| iShares Core SP |
| BNP Paribas Easy |
IShares Core and BNP Paribas Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares Core and BNP Paribas
The main advantage of trading using opposite IShares Core and BNP Paribas positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares Core 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.| IShares Core vs. iShares Corp Bond | IShares Core vs. iShares Emerging Asia | IShares Core vs. iShares MSCI Global | IShares Core vs. iShares VII PLC |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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