Correlation Between BNP Paribas and ScanSource

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

Diversification Opportunities for BNP Paribas and ScanSource

-0.48
  Correlation Coefficient

Very good diversification

The 3 months correlation between BNP and ScanSource is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding BNP Paribas SA and ScanSource in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ScanSource 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 ScanSource. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ScanSource has no effect on the direction of BNP Paribas i.e., BNP Paribas and ScanSource go up and down completely randomly.

Pair Corralation between BNP Paribas and ScanSource

Assuming the 90 days horizon BNP Paribas SA is expected to generate 0.83 times more return on investment than ScanSource. However, BNP Paribas SA is 1.21 times less risky than ScanSource. It trades about 0.08 of its potential returns per unit of risk. ScanSource is currently generating about -0.22 per unit of risk. If you would invest  6,452  in BNP Paribas SA on January 25, 2025 and sell it today you would earn a total of  841.00  from holding BNP Paribas SA or generate 13.03% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthVery Weak
Accuracy98.41%
ValuesDaily Returns

BNP Paribas SA  vs.  ScanSource

 Performance 
       Timeline  
BNP Paribas SA 

Risk-Adjusted Performance

Modest

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in BNP Paribas SA are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, BNP Paribas reported solid returns over the last few months and may actually be approaching a breakup point.
ScanSource 

Risk-Adjusted Performance

Very Weak

 
Weak
 
Strong
Over the last 90 days ScanSource has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in May 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

BNP Paribas and ScanSource Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with BNP Paribas and ScanSource

The main advantage of trading using opposite BNP Paribas and ScanSource positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BNP Paribas position performs unexpectedly, ScanSource 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 ScanSource will offset losses from the drop in ScanSource's long position.
The idea behind BNP Paribas SA and ScanSource 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.

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