Correlation Between Binance Coin and Waves
Can any of the company-specific risk be diversified away by investing in both Binance Coin and Waves 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 Waves into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Binance Coin and Waves, you can compare the effects of market volatilities on Binance Coin and Waves 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 Waves. Check out your portfolio center. Please also check ongoing floating volatility patterns of Binance Coin and Waves.
Diversification Opportunities for Binance Coin and Waves
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Binance and Waves is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Binance Coin and Waves in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Waves 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 Waves. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Waves has no effect on the direction of Binance Coin i.e., Binance Coin and Waves go up and down completely randomly.
Pair Corralation between Binance Coin and Waves
Assuming the 90 days trading horizon Binance Coin is expected to generate 0.64 times more return on investment than Waves. However, Binance Coin is 1.56 times less risky than Waves. It trades about 0.07 of its potential returns per unit of risk. Waves is currently generating about -0.34 per unit of risk. If you would invest 58,029 in Binance Coin on January 24, 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 | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Binance Coin vs. Waves
Performance |
| Timeline |
| Binance Coin |
| Waves |
Binance Coin and Waves Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Binance Coin and Waves
The main advantage of trading using opposite Binance Coin and Waves positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Binance Coin position performs unexpectedly, Waves 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 Waves will offset losses from the drop in Waves' 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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