Correlation Between BNP Paribas and First Hawaiian

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

Diversification Opportunities for BNP Paribas and First Hawaiian

-0.78

Correlation Coefficient

BNP Paribas  First Hawaiian

Pay attention - limited upside

The 3 months correlation between BNP and First is -0.78. Overlapping area represents the amount of risk that can be diversified away by holding BNP Paribas SA and First Hawaiian in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Hawaiian 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 First Hawaiian. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Hawaiian has no effect on the direction of BNP Paribas i.e., BNP Paribas and First Hawaiian go up and down completely randomly.

Pair Corralation between BNP Paribas and First Hawaiian

Assuming the 90 days horizon BNP Paribas SA is expected to under-perform the First Hawaiian. But the otc stock apears to be less risky and, when comparing its historical volatility, BNP Paribas SA is 1.29 times less risky than First Hawaiian. The otc stock trades about -0.34 of its potential returns per unit of risk. The First Hawaiian is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  2,479  in First Hawaiian on September 5, 2024 and sell it today you would earn a total of  227.00  from holding First Hawaiian or generate 9.16% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	95.45%
Values	Daily Returns

BNP Paribas SA  vs.  First Hawaiian

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 weak performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

First Hawaiian

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in First Hawaiian are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite somewhat conflicting technical indicators, First Hawaiian sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with BNP Paribas and First Hawaiian

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

The idea behind BNP Paribas SA and First Hawaiian 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.

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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.