Correlation Between Binance Coin and Innovator

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

By analyzing existing cross correlation between Binance Coin and Innovator SP 500, you can compare the effects of market volatilities on Binance Coin and Innovator 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 Innovator. Check out your portfolio center. Please also check ongoing floating volatility patterns of Binance Coin and Innovator.

Diversification Opportunities for Binance Coin and Innovator

0.27

Correlation Coefficient

Binance Coin  Innovator

Modest diversification

The 3 months correlation between Binance and Innovator is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Binance Coin and Innovator SP 500 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Innovator SP 500 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 Innovator. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Innovator SP 500 has no effect on the direction of Binance Coin i.e., Binance Coin and Innovator go up and down completely randomly.

Pair Corralation between Binance Coin and Innovator

Assuming the 90 days trading horizon Binance Coin is expected to under-perform the Innovator. In addition to that, Binance Coin is 5.0 times more volatile than Innovator SP 500. It trades about -0.04 of its total potential returns per unit of risk. Innovator SP 500 is currently generating about -0.06 per unit of volatility. If you would invest  4,181  in Innovator SP 500 on December 23, 2024 and sell it today you would lose (104.00) from holding Innovator SP 500 or give up 2.49% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	93.85%
Values	Daily Returns

Binance Coin  vs.  Innovator SP 500

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 latest unsteady performance, the Crypto's fundamental drivers remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for Binance Coin shareholders.

Innovator SP 500

Risk-Adjusted Performance

Very Weak

Over the last 90 days Innovator SP 500 has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Innovator is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Binance Coin and Innovator

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

The idea behind Binance Coin and Innovator SP 500 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.