Correlation Between Crdit Agricole and BNP PARIBAS
Can any of the company-specific risk be diversified away by investing in both Crdit Agricole 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 Crdit Agricole and BNP PARIBAS into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Crdit Agricole SA and BNP PARIBAS ADR, you can compare the effects of market volatilities on Crdit Agricole 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 Crdit Agricole with a short position of BNP PARIBAS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Crdit Agricole and BNP PARIBAS.
Diversification Opportunities for Crdit Agricole and BNP PARIBAS
0.94 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Crdit and BNP is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Crdit Agricole SA and BNP PARIBAS ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BNP PARIBAS ADR and Crdit Agricole 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 Crdit Agricole SA 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 ADR has no effect on the direction of Crdit Agricole i.e., Crdit Agricole and BNP PARIBAS go up and down completely randomly.
Pair Corralation between Crdit Agricole and BNP PARIBAS
Assuming the 90 days horizon Crdit Agricole is expected to generate 2.67 times less return on investment than BNP PARIBAS. In addition to that, Crdit Agricole is 1.26 times more volatile than BNP PARIBAS ADR. It trades about 0.02 of its total potential returns per unit of risk. BNP PARIBAS ADR is currently generating about 0.06 per unit of volatility. If you would invest 2,800 in BNP PARIBAS ADR on September 27, 2024 and sell it today you would earn a total of 40.00 from holding BNP PARIBAS ADR or generate 1.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Crdit Agricole SA vs. BNP PARIBAS ADR
Performance |
| Timeline |
| Crdit Agricole SA |
| BNP PARIBAS ADR |
Crdit Agricole and BNP PARIBAS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Crdit Agricole and BNP PARIBAS
The main advantage of trading using opposite Crdit Agricole and BNP PARIBAS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Crdit Agricole 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's long position.| Crdit Agricole vs. BNP Paribas SA | Crdit Agricole vs. BNP PARIBAS ADR | Crdit Agricole vs. Intesa Sanpaolo SpA | Crdit Agricole vs. Lloyds Banking Group |
| BNP PARIBAS vs. BNP Paribas SA | BNP PARIBAS vs. Intesa Sanpaolo SpA | BNP PARIBAS vs. Lloyds Banking Group | BNP PARIBAS vs. Lloyds Banking Group |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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