Correlation Between Vanguard and BNP Paribas
Can any of the company-specific risk be diversified away by investing in both Vanguard 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 Vanguard and BNP Paribas into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vanguard SP 500 and BNP Paribas Easy, you can compare the effects of market volatilities on Vanguard 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 Vanguard with a short position of BNP Paribas. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard and BNP Paribas.
Diversification Opportunities for Vanguard and BNP Paribas
-0.56 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Vanguard and BNP is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard 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 Vanguard 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 Vanguard 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 Vanguard i.e., Vanguard and BNP Paribas go up and down completely randomly.
Pair Corralation between Vanguard and BNP Paribas
Assuming the 90 days trading horizon Vanguard SP 500 is expected to generate 0.74 times more return on investment than BNP Paribas. However, Vanguard SP 500 is 1.36 times less risky than BNP Paribas. It trades about 0.12 of its potential returns per unit of risk. BNP Paribas Easy is currently generating about 0.07 per unit of risk. If you would invest 7,425 in Vanguard SP 500 on September 4, 2024 and sell it today you would earn a total of 2,759 from holding Vanguard SP 500 or generate 37.16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 56.36% |
| Values | Daily Returns |
Vanguard SP 500 vs. BNP Paribas Easy
Performance |
| Timeline |
| Vanguard SP 500 |
| BNP Paribas Easy |
Vanguard and BNP Paribas Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vanguard and BNP Paribas
The main advantage of trading using opposite Vanguard and BNP Paribas positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard 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.| Vanguard vs. Vanguard FTSE Emerging | Vanguard vs. Vanguard USD Emerging | Vanguard vs. Vanguard FTSE Developed | Vanguard vs. Vanguard FTSE Japan |
| BNP Paribas vs. UBSFund Solutions MSCI | BNP Paribas vs. Vanguard SP 500 | BNP Paribas vs. iShares VII PLC | BNP Paribas vs. iShares Core SP |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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