Correlation Between Binance Coin and SOLVE
Can any of the company-specific risk be diversified away by investing in both Binance Coin and SOLVE 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 SOLVE into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Binance Coin and SOLVE, you can compare the effects of market volatilities on Binance Coin and SOLVE 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 SOLVE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Binance Coin and SOLVE.
Diversification Opportunities for Binance Coin and SOLVE
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Binance and SOLVE is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Binance Coin and SOLVE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SOLVE 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 SOLVE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SOLVE has no effect on the direction of Binance Coin i.e., Binance Coin and SOLVE go up and down completely randomly.
Pair Corralation between Binance Coin and SOLVE
Assuming the 90 days trading horizon Binance Coin is expected to generate 0.69 times more return on investment than SOLVE. However, Binance Coin is 1.45 times less risky than SOLVE. It trades about 0.06 of its potential returns per unit of risk. SOLVE is currently generating about -0.15 per unit of risk. If you would invest 58,029 in Binance Coin on January 25, 2024 and sell it today you would earn a total of 2,201 from holding Binance Coin or generate 3.79% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Binance Coin vs. SOLVE
Performance |
| Timeline |
| Binance Coin |
| SOLVE |
Binance Coin and SOLVE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Binance Coin and SOLVE
The main advantage of trading using opposite Binance Coin and SOLVE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Binance Coin position performs unexpectedly, SOLVE 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 SOLVE will offset losses from the drop in SOLVE's long position.| 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 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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