Correlation Between Binance Coin and Compound Governance
Can any of the company-specific risk be diversified away by investing in both Binance Coin and Compound Governance 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 Binance Coin and Compound Governance into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Binance Coin and Compound Governance Token, you can compare the effects of market volatilities on Binance Coin and Compound Governance 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 Binance Coin with a short position of Compound Governance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Binance Coin and Compound Governance.
Diversification Opportunities for Binance Coin and Compound Governance
0.3 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Binance and Compound is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Binance Coin and Compound Governance Token in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Compound Governance Token and Binance Coin 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 Binance Coin are associated (or correlated) with Compound Governance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Compound Governance Token has no effect on the direction of Binance Coin i.e., Binance Coin and Compound Governance go up and down completely randomly.
Pair Corralation between Binance Coin and Compound Governance
Assuming the 90 days trading horizon Binance Coin is expected to generate 0.57 times more return on investment than Compound Governance. However, Binance Coin is 1.76 times less risky than Compound Governance. It trades about 0.06 of its potential returns per unit of risk. Compound Governance Token is currently generating about 0.02 per unit of risk. If you would invest 31,531 in Binance Coin on January 27, 2024 and sell it today you would earn a total of 28,279 from holding Binance Coin or generate 89.69% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Binance Coin vs. Compound Governance Token
Performance |
Timeline |
Binance Coin |
Compound Governance Token |
Binance Coin and Compound Governance Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Binance Coin and Compound Governance
The main advantage of trading using opposite Binance Coin and Compound Governance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Binance Coin position performs unexpectedly, Compound Governance 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 Compound Governance will offset losses from the drop in Compound Governance's long position.Binance Coin vs. Staked Ether | Binance Coin vs. Cronos | Binance Coin vs. Wrapped Bitcoin | Binance Coin vs. Monero |
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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 Stocks Directory module to find actively traded stocks across global markets.
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