Correlation Between BNP Paribas and Fifth Third
Can any of the company-specific risk be diversified away by investing in both BNP Paribas and Fifth Third 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 BNP Paribas and Fifth Third into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BNP Paribas SA and Fifth Third Bancorp, you can compare the effects of market volatilities on BNP Paribas and Fifth Third 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 BNP Paribas with a short position of Fifth Third. Check out your portfolio center. Please also check ongoing floating volatility patterns of BNP Paribas and Fifth Third.
Diversification Opportunities for BNP Paribas and Fifth Third
-0.01 | Correlation Coefficient |
Good diversification
The 3 months correlation between BNP and Fifth is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding BNP Paribas SA and Fifth Third Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fifth Third Bancorp and BNP Paribas 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 BNP Paribas SA are associated (or correlated) with Fifth Third. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fifth Third Bancorp has no effect on the direction of BNP Paribas i.e., BNP Paribas and Fifth Third go up and down completely randomly.
Pair Corralation between BNP Paribas and Fifth Third
Assuming the 90 days horizon BNP Paribas SA is expected to generate 1.86 times more return on investment than Fifth Third. However, BNP Paribas is 1.86 times more volatile than Fifth Third Bancorp. It trades about 0.39 of its potential returns per unit of risk. Fifth Third Bancorp is currently generating about -0.1 per unit of risk. If you would invest 2,997 in BNP Paribas SA on January 25, 2024 and sell it today you would earn a total of 649.00 from holding BNP Paribas SA or generate 21.65% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
BNP Paribas SA vs. Fifth Third Bancorp
Performance |
Timeline |
BNP Paribas SA |
Fifth Third Bancorp |
BNP Paribas and Fifth Third Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with BNP Paribas and Fifth Third
The main advantage of trading using opposite BNP Paribas and Fifth Third positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BNP Paribas position performs unexpectedly, Fifth Third 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 Fifth Third will offset losses from the drop in Fifth Third's long position.BNP Paribas vs. Stevia Nutra Corp | BNP Paribas vs. Regent Ventures | BNP Paribas vs. Element Global | BNP Paribas vs. Affiliated Resources Corp |
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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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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