Correlation Between Banco Bilbao and Bnp Paribas

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Can any of the company-specific risk be diversified away by investing in both Banco Bilbao 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 Banco Bilbao and Bnp Paribas into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Banco Bilbao Viscaya and Bnp Paribas Ord, you can compare the effects of market volatilities on Banco Bilbao 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 Banco Bilbao with a short position of Bnp Paribas. Check out your portfolio center. Please also check ongoing floating volatility patterns of Banco Bilbao and Bnp Paribas.

Diversification Opportunities for Banco Bilbao and Bnp Paribas

0.76
  Correlation Coefficient

Poor diversification

The 3 months correlation between Banco and BNPQF is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Banco Bilbao Viscaya and Bnp Paribas Ord in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bnp Paribas Ord and Banco Bilbao 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 Banco Bilbao Viscaya 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 Ord has no effect on the direction of Banco Bilbao i.e., Banco Bilbao and Bnp Paribas go up and down completely randomly.

Pair Corralation between Banco Bilbao and Bnp Paribas

Given the investment horizon of 90 days Banco Bilbao is expected to generate 1.36 times less return on investment than Bnp Paribas. But when comparing it to its historical volatility, Banco Bilbao Viscaya is 1.7 times less risky than Bnp Paribas. It trades about 0.03 of its potential returns per unit of risk. Bnp Paribas Ord is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  4,732  in Bnp Paribas Ord on September 1, 2022 and sell it today you would earn a total of  816.00  from holding Bnp Paribas Ord or generate 17.24% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy99.8%
ValuesDaily Returns

Banco Bilbao Viscaya  vs.  Bnp Paribas Ord

 Performance (%) 
       Timeline  
Banco Bilbao Viscaya 
Banco Performance
17 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Banco Bilbao Viscaya are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. Despite somewhat sluggish basic indicators, Banco Bilbao sustained solid returns over the last few months and may actually be approaching a breakup point.

Banco Price Channel

Bnp Paribas Ord 
BNPQF Performance
9 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Bnp Paribas Ord are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak basic indicators, Bnp Paribas exhibited solid returns over the last few months and may actually be approaching a breakup point.

BNPQF Price Channel

Banco Bilbao and Bnp Paribas Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Banco Bilbao and Bnp Paribas

The main advantage of trading using opposite Banco Bilbao and Bnp Paribas positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Banco Bilbao 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.
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The idea behind Banco Bilbao Viscaya and Bnp Paribas Ord 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.
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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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.

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