Correlation Between BNPP Greenbond and BNPP EHY
Can any of the company-specific risk be diversified away by investing in both BNPP Greenbond and BNPP EHY 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 BNPP Greenbond and BNPP EHY into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BNPP Greenbond ETF and BNPP EHY SRI, you can compare the effects of market volatilities on BNPP Greenbond and BNPP EHY 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 BNPP Greenbond with a short position of BNPP EHY. Check out your portfolio center. Please also check ongoing floating volatility patterns of BNPP Greenbond and BNPP EHY.
Diversification Opportunities for BNPP Greenbond and BNPP EHY
0.5 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between BNPP and BNPP is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding BNPP Greenbond ETF and BNPP EHY SRI in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BNPP EHY SRI and BNPP Greenbond 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 BNPP Greenbond ETF are associated (or correlated) with BNPP EHY. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BNPP EHY SRI has no effect on the direction of BNPP Greenbond i.e., BNPP Greenbond and BNPP EHY go up and down completely randomly.
Pair Corralation between BNPP Greenbond and BNPP EHY
Assuming the 90 days trading horizon BNPP Greenbond ETF is expected to under-perform the BNPP EHY. In addition to that, BNPP Greenbond is 1.55 times more volatile than BNPP EHY SRI. It trades about -0.13 of its total potential returns per unit of risk. BNPP EHY SRI is currently generating about 0.12 per unit of volatility. If you would invest 930.00 in BNPP EHY SRI on October 25, 2024 and sell it today you would earn a total of 7.00 from holding BNPP EHY SRI or generate 0.75% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
BNPP Greenbond ETF vs. BNPP EHY SRI
Performance |
| Timeline |
| BNPP Greenbond ETF |
| BNPP EHY SRI |
BNPP Greenbond and BNPP EHY Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BNPP Greenbond and BNPP EHY
The main advantage of trading using opposite BNPP Greenbond and BNPP EHY positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BNPP Greenbond position performs unexpectedly, BNPP EHY 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 BNPP EHY will offset losses from the drop in BNPP EHY's long position.| BNPP Greenbond vs. Lyxor UCITS Japan | BNPP Greenbond vs. Lyxor UCITS Japan | BNPP Greenbond vs. Lyxor UCITS Stoxx | BNPP Greenbond vs. Amundi CAC 40 |
| BNPP EHY vs. BNPP BONDSRI ETF | BNPP EHY vs. BNPP LC EURPAB | BNPP EHY vs. BNPP Greenbond ETF | BNPP EHY vs. BNPP EHY SRI |
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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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