Correlation Between Binance Coin and USD Coin

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

By analyzing existing cross correlation between Binance Coin and USD Coin, you can compare the effects of market volatilities on Binance Coin and USD Coin 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 USD Coin. Check out your portfolio center. Please also check ongoing floating volatility patterns of Binance Coin and USD Coin.

Diversification Opportunities for Binance Coin and USD Coin

0.0

Correlation Coefficient

Binance Coin  USD Coin

Pay attention - limited upside

The 3 months correlation between Binance and USD is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Binance Coin and USD Coin in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on USD Coin 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 USD Coin. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of USD Coin has no effect on the direction of Binance Coin i.e., Binance Coin and USD Coin go up and down completely randomly.

Pair Corralation between Binance Coin and USD Coin

If you would invest  39,488  in Binance Coin on January 25, 2024 and sell it today you would earn a total of  21,132  from holding Binance Coin or generate 53.51% return on investment over 90 days.

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

Binance Coin  vs.  USD Coin

Binance Coin

Risk-Adjusted Performance

20 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Binance Coin are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady fundamental drivers, Binance Coin exhibited solid returns over the last few months and may actually be approaching a breakup point.

USD Coin

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days USD Coin has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, USD Coin is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Binance Coin and USD Coin

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

The idea behind Binance Coin and USD Coin 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.