Correlation Between Binance Coin and Bank of Montreal

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

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

Diversification Opportunities for Binance Coin and Bank of Montreal

-0.07

Correlation Coefficient

Binance Coin  Bank of Montreal

Good diversification

The 3 months correlation between Binance and Bank is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding Binance Coin and Bank of Montreal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bank of Montreal 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 Bank of Montreal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bank of Montreal has no effect on the direction of Binance Coin i.e., Binance Coin and Bank of Montreal go up and down completely randomly.

Pair Corralation between Binance Coin and Bank of Montreal

Assuming the 90 days trading horizon Binance Coin is expected to generate 0.55 times more return on investment than Bank of Montreal. However, Binance Coin is 1.82 times less risky than Bank of Montreal. It trades about -0.02 of its potential returns per unit of risk. Bank of Montreal is currently generating about -0.24 per unit of risk. If you would invest  66,306  in Binance Coin on December 20, 2024 and sell it today you would lose (4,546) from holding Binance Coin or give up 6.86% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	33.33%
Values	Daily Returns

Binance Coin  vs.  Bank of Montreal

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 rather sound fundamental drivers, Binance Coin is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Bank of Montreal

Risk-Adjusted Performance

Very Weak

Over the last 90 days Bank of Montreal has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Etf's forward-looking signals remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the exchange-traded fund private investors.

Pair Trading with Binance Coin and Bank of Montreal

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

The idea behind Binance Coin and Bank of Montreal 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.