Correlation Between Binance Coin and US Dollar
Can any of the company-specific risk be diversified away by investing in both Binance Coin and US Dollar 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 US Dollar into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Binance Coin and US Dollar Currency, you can compare the effects of market volatilities on Binance Coin and US Dollar 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 US Dollar. Check out your portfolio center. Please also check ongoing floating volatility patterns of Binance Coin and US Dollar.
Diversification Opportunities for Binance Coin and US Dollar
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Binance and DXY is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Binance Coin and US Dollar Currency in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on US Dollar Currency 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 US Dollar. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of US Dollar Currency has no effect on the direction of Binance Coin i.e., Binance Coin and US Dollar go up and down completely randomly.
Pair Corralation between Binance Coin and US Dollar
Assuming the 90 days trading horizon Binance Coin is expected to generate 8.33 times more return on investment than US Dollar. However, Binance Coin is 8.33 times more volatile than US Dollar Currency. It trades about 0.12 of its potential returns per unit of risk. US Dollar Currency is currently generating about 0.19 per unit of risk. If you would invest 62,486 in Binance Coin on October 9, 2024 and sell it today you would earn a total of 10,484 from holding Binance Coin or generate 16.78% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 97.62% |
Values | Daily Returns |
Binance Coin vs. US Dollar Currency
Performance |
Timeline |
Binance Coin and US Dollar Volatility Contrast
Predicted Return Density |
Returns |
Binance Coin
Pair trading matchups for Binance Coin
US Dollar Currency
Pair trading matchups for US Dollar
Pair Trading with Binance Coin and US Dollar
The main advantage of trading using opposite Binance Coin and US Dollar positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Binance Coin position performs unexpectedly, US Dollar 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 US Dollar will offset losses from the drop in US Dollar's long position.Binance Coin vs. Staked Ether | Binance Coin vs. Cronos | Binance Coin vs. Wrapped Bitcoin | Binance Coin vs. Monero |
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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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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