Correlation Between Societe Generale and BNP Paribas

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

Diversification Opportunities for Societe Generale and BNP Paribas

-0.42
  Correlation Coefficient

Very good diversification

The 3 months correlation between Societe and BNP is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding Societe Generale ADR 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 Societe Generale 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 Societe Generale ADR 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 Societe Generale i.e., Societe Generale and BNP Paribas go up and down completely randomly.

Pair Corralation between Societe Generale and BNP Paribas

Assuming the 90 days horizon Societe Generale ADR is expected to generate 0.86 times more return on investment than BNP Paribas. However, Societe Generale ADR is 1.17 times less risky than BNP Paribas. It trades about -0.02 of its potential returns per unit of risk. BNP Paribas SA is currently generating about -0.03 per unit of risk. If you would invest  575.00  in Societe Generale ADR on September 12, 2024 and sell it today you would lose (6.00) from holding Societe Generale ADR or give up 1.04% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

Societe Generale ADR  vs.  BNP Paribas SA

 Performance 
       Timeline  
Societe Generale ADR 

Risk-Adjusted Performance

8 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in Societe Generale ADR are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak essential indicators, Societe Generale showed solid returns over the last few months and may actually be approaching a breakup point.
BNP Paribas SA 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
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.

Societe Generale and BNP Paribas Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Societe Generale and BNP Paribas

The main advantage of trading using opposite Societe Generale and BNP Paribas positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Societe Generale 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 Societe Generale ADR 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.
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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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.

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