Correlation Between Binance Coin and Airbus SE

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

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

Diversification Opportunities for Binance Coin and Airbus SE

-0.7

Correlation Coefficient

Binance Coin  Airbus SE

Excellent diversification

The 3 months correlation between Binance and Airbus is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding Binance Coin and Airbus SE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Airbus SE 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 Airbus SE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Airbus SE has no effect on the direction of Binance Coin i.e., Binance Coin and Airbus SE go up and down completely randomly.

Pair Corralation between Binance Coin and Airbus SE

Assuming the 90 days trading horizon Binance Coin is expected to under-perform the Airbus SE. In addition to that, Binance Coin is 1.82 times more volatile than Airbus SE. It trades about -0.07 of its total potential returns per unit of risk. Airbus SE is currently generating about 0.05 per unit of volatility. If you would invest  3,900  in Airbus SE on December 11, 2024 and sell it today you would earn a total of  180.00  from holding Airbus SE or generate 4.62% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	93.65%
Values	Daily Returns

Binance Coin  vs.  Airbus SE

Binance Coin

Risk-Adjusted Performance

Very Weak

Over the last 90 days Binance Coin has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Crypto's fundamental drivers remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for Binance Coin shareholders.

Airbus SE

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Airbus SE are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound technical and fundamental indicators, Airbus SE is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Binance Coin and Airbus SE

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

The idea behind Binance Coin and Airbus SE 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.

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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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.