Correlation Between SPDR SP and BNP Paribas
Can any of the company-specific risk be diversified away by investing in both SPDR SP 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 SPDR SP and BNP Paribas into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SPDR SP 500 and BNP Paribas Easy, you can compare the effects of market volatilities on SPDR SP 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 SPDR SP with a short position of BNP Paribas. Check out your portfolio center. Please also check ongoing floating volatility patterns of SPDR SP and BNP Paribas.
Diversification Opportunities for SPDR SP and BNP Paribas
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between SPDR and BNP is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding SPDR SP 500 and BNP Paribas Easy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BNP Paribas Easy and SPDR SP 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 SPDR SP 500 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 Easy has no effect on the direction of SPDR SP i.e., SPDR SP and BNP Paribas go up and down completely randomly.
Pair Corralation between SPDR SP and BNP Paribas
Assuming the 90 days trading horizon SPDR SP 500 is expected to generate 6.21 times more return on investment than BNP Paribas. However, SPDR SP is 6.21 times more volatile than BNP Paribas Easy. It trades about 0.16 of its potential returns per unit of risk. BNP Paribas Easy is currently generating about 0.26 per unit of risk. If you would invest 48,187 in SPDR SP 500 on September 1, 2024 and sell it today you would earn a total of 9,033 from holding SPDR SP 500 or generate 18.75% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
SPDR SP 500 vs. BNP Paribas Easy
Performance |
| Timeline |
| SPDR SP 500 |
| BNP Paribas Easy |
SPDR SP and BNP Paribas Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SPDR SP and BNP Paribas
The main advantage of trading using opposite SPDR SP and BNP Paribas positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SPDR SP 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.| SPDR SP vs. SPDR MSCI Europe | SPDR SP vs. SPDR MSCI Europe | SPDR SP vs. SPDR Barclays Cap | SPDR SP vs. SPDR MSCI Europe |
| BNP Paribas vs. Lyxor MSCI China | BNP Paribas vs. Manitou BF SA | BNP Paribas vs. Ossiam Minimum Variance | BNP Paribas vs. Granite 3x LVMH |
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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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