Correlation Between Binance Coin and BrightSpring Health

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

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

Diversification Opportunities for Binance Coin and BrightSpring Health

0.42

Correlation Coefficient

Binance Coin  BrightSpring Health

Very weak diversification

The 3 months correlation between Binance and BrightSpring is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Binance Coin and BrightSpring Health Services, in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BrightSpring Health 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 BrightSpring Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BrightSpring Health has no effect on the direction of Binance Coin i.e., Binance Coin and BrightSpring Health go up and down completely randomly.

Pair Corralation between Binance Coin and BrightSpring Health

Assuming the 90 days trading horizon Binance Coin is expected to generate 1.78 times less return on investment than BrightSpring Health. But when comparing it to its historical volatility, Binance Coin is 1.11 times less risky than BrightSpring Health. It trades about 0.11 of its potential returns per unit of risk. BrightSpring Health Services, is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest  1,550  in BrightSpring Health Services, on October 25, 2024 and sell it today you would earn a total of  569.00  from holding BrightSpring Health Services, or generate 36.71% return on investment over 90 days.

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

Binance Coin  vs.  BrightSpring Health Services,

Binance Coin

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Binance Coin are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady fundamental drivers, Binance Coin exhibited solid returns over the last few months and may actually be approaching a breakup point.

BrightSpring Health

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in BrightSpring Health Services, are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite nearly unfluctuating basic indicators, BrightSpring Health reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Binance Coin and BrightSpring Health

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

The idea behind Binance Coin and BrightSpring Health Services, 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.

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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.