Correlation Between BNP Paribas and Sanofi SA

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

Diversification Opportunities for BNP Paribas and Sanofi SA

-0.11

Correlation Coefficient

BNP Paribas  Sanofi SA

Good diversification

The 3 months correlation between BNP and Sanofi is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding BNP Paribas SA and Sanofi SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sanofi SA 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 Sanofi SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sanofi SA has no effect on the direction of BNP Paribas i.e., BNP Paribas and Sanofi SA go up and down completely randomly.

Pair Corralation between BNP Paribas and Sanofi SA

Assuming the 90 days trading horizon BNP Paribas SA is expected to generate 0.98 times more return on investment than Sanofi SA. However, BNP Paribas SA is 1.03 times less risky than Sanofi SA. It trades about 0.1 of its potential returns per unit of risk. Sanofi SA is currently generating about -0.06 per unit of risk. If you would invest  7,143  in BNP Paribas SA on May 7, 2025 and sell it today you would earn a total of  695.00  from holding BNP Paribas SA or generate 9.73% return on investment over 90 days.

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

BNP Paribas SA  vs.  Sanofi SA

BNP Paribas SA

Risk-Adjusted Performance

Fair

Compared to the overall equity markets, risk-adjusted returns on investments in BNP Paribas SA are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, BNP Paribas may actually be approaching a critical reversion point that can send shares even higher in September 2025.

Sanofi SA

Risk-Adjusted Performance

Weakest

Over the last 90 days Sanofi SA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Sanofi SA is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with BNP Paribas and Sanofi SA

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

The idea behind BNP Paribas SA and Sanofi 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.