Correlation Between VanEck Defense and BNP Paribas

Can any of the company-specific risk be diversified away by investing in both VanEck Defense 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 VanEck Defense and BNP Paribas into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between VanEck Defense ETF and BNP Paribas Easy, you can compare the effects of market volatilities on VanEck Defense 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 VanEck Defense with a short position of BNP Paribas. Check out your portfolio center. Please also check ongoing floating volatility patterns of VanEck Defense and BNP Paribas.

Diversification Opportunities for VanEck Defense and BNP Paribas

0.82

Correlation Coefficient

VanEck Defense  BNP Paribas

Very poor diversification

The 3 months correlation between VanEck and BNP is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding VanEck Defense ETF and BNP Paribas Easy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BNP Paribas Easy and VanEck Defense 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 VanEck Defense ETF 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 Easy has no effect on the direction of VanEck Defense i.e., VanEck Defense and BNP Paribas go up and down completely randomly.

Pair Corralation between VanEck Defense and BNP Paribas

Assuming the 90 days trading horizon VanEck Defense ETF is expected to generate 1.8 times more return on investment than BNP Paribas. However, VanEck Defense is 1.8 times more volatile than BNP Paribas Easy. It trades about -0.1 of its potential returns per unit of risk. BNP Paribas Easy is currently generating about -0.31 per unit of risk. If you would invest  3,557  in VanEck Defense ETF on September 25, 2024 and sell it today you would lose (75.00) from holding VanEck Defense ETF or give up 2.11% of portfolio value over 90 days.

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

VanEck Defense ETF  vs.  BNP Paribas Easy

VanEck Defense ETF

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in VanEck Defense ETF are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile basic indicators, VanEck Defense may actually be approaching a critical reversion point that can send shares even higher in January 2025.

BNP Paribas Easy

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in BNP Paribas Easy are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile basic indicators, BNP Paribas may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with VanEck Defense and BNP Paribas

The main advantage of trading using opposite VanEck Defense and BNP Paribas positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if VanEck Defense 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 VanEck Defense ETF and BNP Paribas Easy 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..