Correlation Between Lumia and BNP Paribas
Can any of the company-specific risk be diversified away by investing in both Lumia 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 Lumia and BNP Paribas into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lumia and BNP Paribas SA, you can compare the effects of market volatilities on Lumia 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 Lumia with a short position of BNP Paribas. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lumia and BNP Paribas.
Diversification Opportunities for Lumia and BNP Paribas
-0.35 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Lumia and BNP is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding Lumia 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 Lumia 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 Lumia 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 Lumia i.e., Lumia and BNP Paribas go up and down completely randomly.
Pair Corralation between Lumia and BNP Paribas
Assuming the 90 days trading horizon Lumia is expected to generate 28.02 times more return on investment than BNP Paribas. However, Lumia is 28.02 times more volatile than BNP Paribas SA. It trades about 0.04 of its potential returns per unit of risk. BNP Paribas SA is currently generating about 0.02 per unit of risk. If you would invest 0.00 in Lumia on October 14, 2024 and sell it today you would earn a total of 114.00 from holding Lumia or generate 9.223372036854776E16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 97.67% |
| Values | Daily Returns |
Lumia vs. BNP Paribas SA
Performance |
| Timeline |
| Lumia |
| BNP Paribas SA |
Lumia and BNP Paribas Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lumia and BNP Paribas
The main advantage of trading using opposite Lumia and BNP Paribas positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lumia 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.The idea behind Lumia and BNP Paribas SA pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| BNP Paribas vs. EAT WELL INVESTMENT | BNP Paribas vs. Japan Asia Investment | BNP Paribas vs. TOREX SEMICONDUCTOR LTD | BNP Paribas vs. Magnachip Semiconductor |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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