Correlation Between BNP Paribas and Intesa Sanpaolo

Can any of the company-specific risk be diversified away by investing in both BNP Paribas and Intesa Sanpaolo 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 Intesa Sanpaolo 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 Intesa Sanpaolo SpA, you can compare the effects of market volatilities on BNP Paribas and Intesa Sanpaolo 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 Intesa Sanpaolo. Check out your portfolio center. Please also check ongoing floating volatility patterns of BNP Paribas and Intesa Sanpaolo.

Diversification Opportunities for BNP Paribas and Intesa Sanpaolo

0.14

Correlation Coefficient

BNP Paribas  Intesa Sanpaolo

Average diversification

The 3 months correlation between BNP and Intesa is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding BNP Paribas SA and Intesa Sanpaolo SpA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Intesa Sanpaolo SpA 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 Intesa Sanpaolo. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Intesa Sanpaolo SpA has no effect on the direction of BNP Paribas i.e., BNP Paribas and Intesa Sanpaolo go up and down completely randomly.

Pair Corralation between BNP Paribas and Intesa Sanpaolo

Assuming the 90 days horizon BNP Paribas SA is expected to under-perform the Intesa Sanpaolo. But the stock apears to be less risky and, when comparing its historical volatility, BNP Paribas SA is 1.06 times less risky than Intesa Sanpaolo. The stock trades about -0.09 of its potential returns per unit of risk. The Intesa Sanpaolo SpA is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  361.00  in Intesa Sanpaolo SpA on September 23, 2024 and sell it today you would earn a total of  19.00  from holding Intesa Sanpaolo SpA or generate 5.26% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

BNP Paribas SA  vs.  Intesa Sanpaolo SpA

BNP Paribas SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days BNP Paribas SA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Intesa Sanpaolo SpA

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Intesa Sanpaolo SpA are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Intesa Sanpaolo is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with BNP Paribas and Intesa Sanpaolo

The main advantage of trading using opposite BNP Paribas and Intesa Sanpaolo positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BNP Paribas position performs unexpectedly, Intesa Sanpaolo 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 Intesa Sanpaolo will offset losses from the drop in Intesa Sanpaolo's long position.

The idea behind BNP Paribas SA and Intesa Sanpaolo SpA 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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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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.