Correlation Between Bitcoin Cash and Binance Coin
Can any of the company-specific risk be diversified away by investing in both Bitcoin Cash and Binance 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 Bitcoin Cash and Binance Coin into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bitcoin Cash and Binance Coin, you can compare the effects of market volatilities on Bitcoin Cash and Binance 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 Bitcoin Cash with a short position of Binance Coin. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bitcoin Cash and Binance Coin.
Diversification Opportunities for Bitcoin Cash and Binance Coin
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Bitcoin and Binance is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Bitcoin Cash and Binance Coin in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Binance Coin and Bitcoin Cash 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 Bitcoin Cash are associated (or correlated) with Binance Coin. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Binance Coin has no effect on the direction of Bitcoin Cash i.e., Bitcoin Cash and Binance Coin go up and down completely randomly.
Pair Corralation between Bitcoin Cash and Binance Coin
Assuming the 90 days trading horizon Bitcoin Cash is expected to generate 2.0 times more return on investment than Binance Coin. However, Bitcoin Cash is 2.0 times more volatile than Binance Coin. It trades about 0.14 of its potential returns per unit of risk. Binance Coin is currently generating about 0.01 per unit of risk. If you would invest 41,441 in Bitcoin Cash on January 20, 2024 and sell it today you would earn a total of 7,101 from holding Bitcoin Cash or generate 17.14% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bitcoin Cash vs. Binance Coin
Performance |
| Timeline |
| Bitcoin Cash |
| Binance Coin |
Bitcoin Cash and Binance Coin Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bitcoin Cash and Binance Coin
The main advantage of trading using opposite Bitcoin Cash and Binance Coin positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bitcoin Cash position performs unexpectedly, Binance 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 Binance Coin will offset losses from the drop in Binance Coin's long position.| Bitcoin Cash vs. Bitcoin | Bitcoin Cash vs. Dogecoin | Bitcoin Cash vs. Litecoin | Bitcoin Cash vs. Ethereum Classic |
| Binance Coin vs. Staked Ether | Binance Coin vs. Cronos | Binance Coin vs. Wrapped Bitcoin | Binance Coin vs. Monero |
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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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