Correlation Between Vinci SA and BNP Paribas
Can any of the company-specific risk be diversified away by investing in both Vinci SA 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 Vinci SA and BNP Paribas into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vinci SA and BNP Paribas SA, you can compare the effects of market volatilities on Vinci SA 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 Vinci SA with a short position of BNP Paribas. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vinci SA and BNP Paribas.
Diversification Opportunities for Vinci SA and BNP Paribas
0.57 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Vinci and BNP is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Vinci 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 Vinci SA 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 Vinci 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 Vinci SA i.e., Vinci SA and BNP Paribas go up and down completely randomly.
Pair Corralation between Vinci SA and BNP Paribas
Assuming the 90 days horizon Vinci SA is expected to generate 0.51 times more return on investment than BNP Paribas. However, Vinci SA is 1.96 times less risky than BNP Paribas. It trades about -0.18 of its potential returns per unit of risk. BNP Paribas SA is currently generating about -0.42 per unit of risk. If you would invest 10,365 in Vinci SA on August 28, 2024 and sell it today you would lose (325.00) from holding Vinci SA or give up 3.14% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Vinci SA vs. BNP Paribas SA
Performance |
| Timeline |
| Vinci SA |
| BNP Paribas SA |
Vinci SA and BNP Paribas Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vinci SA and BNP Paribas
The main advantage of trading using opposite Vinci SA and BNP Paribas positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vinci SA 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.| Vinci SA vs. Air Liquide SA | Vinci SA vs. Bouygues SA | Vinci SA vs. AXA SA | Vinci SA 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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