Correlation Between Stock Yards and BNP Paribas
Can any of the company-specific risk be diversified away by investing in both Stock Yards 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 Stock Yards and BNP Paribas into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Stock Yards Bancorp and BNP Paribas SA, you can compare the effects of market volatilities on Stock Yards 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 Stock Yards with a short position of BNP Paribas. Check out your portfolio center. Please also check ongoing floating volatility patterns of Stock Yards and BNP Paribas.
Diversification Opportunities for Stock Yards and BNP Paribas
0.04 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Stock and BNP is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Stock Yards Bancorp 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 Stock Yards 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 Stock Yards Bancorp 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 Stock Yards i.e., Stock Yards and BNP Paribas go up and down completely randomly.
Pair Corralation between Stock Yards and BNP Paribas
Given the investment horizon of 90 days Stock Yards Bancorp is expected to under-perform the BNP Paribas. In addition to that, Stock Yards is 1.7 times more volatile than BNP Paribas SA. It trades about -0.12 of its total potential returns per unit of risk. BNP Paribas SA is currently generating about 0.06 per unit of volatility. If you would invest 6,755 in BNP Paribas SA on January 20, 2024 and sell it today you would earn a total of 101.00 from holding BNP Paribas SA or generate 1.5% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Insignificant |
Accuracy | 95.45% |
Values | Daily Returns |
Stock Yards Bancorp vs. BNP Paribas SA
Performance |
Timeline |
Stock Yards Bancorp |
BNP Paribas SA |
Stock Yards and BNP Paribas Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Stock Yards and BNP Paribas
The main advantage of trading using opposite Stock Yards and BNP Paribas positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Stock Yards 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.The idea behind Stock Yards Bancorp and BNP Paribas SA pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.BNP Paribas vs. Lloyds Banking Group | BNP Paribas vs. Bank of Hawaii | BNP Paribas vs. Deutsche Bank AG | BNP Paribas vs. PNC Financial Services |
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 CEOs Directory module to screen CEOs from public companies around the world.
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