Correlation Between BNP Paribas and Vanguard
Can any of the company-specific risk be diversified away by investing in both BNP Paribas and Vanguard 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 Vanguard into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BNP Paribas Easy and Vanguard SP 500, you can compare the effects of market volatilities on BNP Paribas and Vanguard 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 Vanguard. Check out your portfolio center. Please also check ongoing floating volatility patterns of BNP Paribas and Vanguard.
Diversification Opportunities for BNP Paribas and Vanguard
-0.35 | Correlation Coefficient |
Very good diversification
The 3 months correlation between BNP and Vanguard is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding BNP Paribas Easy and Vanguard SP 500 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard SP 500 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 Easy are associated (or correlated) with Vanguard. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vanguard SP 500 has no effect on the direction of BNP Paribas i.e., BNP Paribas and Vanguard go up and down completely randomly.
Pair Corralation between BNP Paribas and Vanguard
Assuming the 90 days trading horizon BNP Paribas is expected to generate 1.68 times less return on investment than Vanguard. But when comparing it to its historical volatility, BNP Paribas Easy is 1.12 times less risky than Vanguard. It trades about 0.16 of its potential returns per unit of risk. Vanguard SP 500 is currently generating about 0.24 of returns per unit of risk over similar time horizon. If you would invest 9,814 in Vanguard SP 500 on September 7, 2024 and sell it today you would earn a total of 346.00 from holding Vanguard SP 500 or generate 3.53% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
BNP Paribas Easy vs. Vanguard SP 500
Performance |
| Timeline |
| BNP Paribas Easy |
| Vanguard SP 500 |
BNP Paribas and Vanguard Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BNP Paribas and Vanguard
The main advantage of trading using opposite BNP Paribas and Vanguard positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BNP Paribas position performs unexpectedly, Vanguard 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 Vanguard will offset losses from the drop in Vanguard's long position.| BNP Paribas vs. BNP Paribas Easy | BNP Paribas vs. BNP Paribas Easy | BNP Paribas vs. BNP Paribas Easy | BNP Paribas vs. BNP Paribas Easy |
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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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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