Correlation Between Binance Coin and Fidelity

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

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

Diversification Opportunities for Binance Coin and Fidelity

-0.48

Correlation Coefficient

Binance Coin  Fidelity

Very good diversification

The 3 months correlation between Binance and Fidelity is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding Binance Coin and Fidelity Low Volatility in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity Low Volatility 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 Fidelity. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fidelity Low Volatility has no effect on the direction of Binance Coin i.e., Binance Coin and Fidelity go up and down completely randomly.

Pair Corralation between Binance Coin and Fidelity

Assuming the 90 days trading horizon Binance Coin is expected to under-perform the Fidelity. In addition to that, Binance Coin is 4.64 times more volatile than Fidelity Low Volatility. It trades about -0.03 of its total potential returns per unit of risk. Fidelity Low Volatility is currently generating about 0.06 per unit of volatility. If you would invest  1,195  in Fidelity Low Volatility on December 22, 2024 and sell it today you would earn a total of  28.00  from holding Fidelity Low Volatility or generate 2.34% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	93.75%
Values	Daily Returns

Binance Coin  vs.  Fidelity Low Volatility

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.

Fidelity Low Volatility

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Fidelity Low Volatility are ranked lower than 4 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Fidelity is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Binance Coin and Fidelity

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

The idea behind Binance Coin and Fidelity Low Volatility 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.