Correlation Between Universal Entertainment and BNP Paribas
Can any of the company-specific risk be diversified away by investing in both Universal Entertainment 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 Universal Entertainment and BNP Paribas into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Universal Entertainment and BNP Paribas SA, you can compare the effects of market volatilities on Universal Entertainment 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 Universal Entertainment with a short position of BNP Paribas. Check out your portfolio center. Please also check ongoing floating volatility patterns of Universal Entertainment and BNP Paribas.
Diversification Opportunities for Universal Entertainment and BNP Paribas
0.18 | Correlation Coefficient |
Average diversification
The 3 months correlation between Universal and BNP is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding Universal Entertainment 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 Universal Entertainment 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 Universal Entertainment 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 Universal Entertainment i.e., Universal Entertainment and BNP Paribas go up and down completely randomly.
Pair Corralation between Universal Entertainment and BNP Paribas
Assuming the 90 days trading horizon Universal Entertainment is expected to under-perform the BNP Paribas. In addition to that, Universal Entertainment is 1.9 times more volatile than BNP Paribas SA. It trades about -0.09 of its total potential returns per unit of risk. BNP Paribas SA is currently generating about 0.01 per unit of volatility. If you would invest 5,549 in BNP Paribas SA on August 25, 2024 and sell it today you would earn a total of 146.00 from holding BNP Paribas SA or generate 2.63% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Universal Entertainment vs. BNP Paribas SA
Performance |
| Timeline |
| Universal Entertainment |
| BNP Paribas SA |
Universal Entertainment and BNP Paribas Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Universal Entertainment and BNP Paribas
The main advantage of trading using opposite Universal Entertainment and BNP Paribas positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Universal Entertainment 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.| Universal Entertainment vs. Apple Inc | Universal Entertainment vs. Apple Inc | Universal Entertainment vs. Apple Inc | Universal Entertainment vs. Apple Inc |
| BNP Paribas vs. GigaMedia | BNP Paribas vs. Universal Entertainment | BNP Paribas vs. PT Global Mediacom | BNP Paribas vs. Ryanair Holdings 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 Global Correlations module to find global opportunities by holding instruments from different markets.
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