Correlation Between Binance Coin and Naturgy Energy

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

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

Diversification Opportunities for Binance Coin and Naturgy Energy

-0.71

Correlation Coefficient

Binance Coin  Naturgy Energy

Pay attention - limited upside

The 3 months correlation between Binance and Naturgy is -0.71. Overlapping area represents the amount of risk that can be diversified away by holding Binance Coin and Naturgy Energy Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Naturgy Energy Group 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 Naturgy Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Naturgy Energy Group has no effect on the direction of Binance Coin i.e., Binance Coin and Naturgy Energy go up and down completely randomly.

Pair Corralation between Binance Coin and Naturgy Energy

Assuming the 90 days trading horizon Binance Coin is expected to under-perform the Naturgy Energy. In addition to that, Binance Coin is 2.13 times more volatile than Naturgy Energy Group. It trades about -0.03 of its total potential returns per unit of risk. Naturgy Energy Group is currently generating about 0.11 per unit of volatility. If you would invest  2,306  in Naturgy Energy Group on December 21, 2024 and sell it today you would earn a total of  222.00  from holding Naturgy Energy Group or generate 9.63% return on investment over 90 days.

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

Binance Coin  vs.  Naturgy Energy Group

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.

Naturgy Energy Group

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Naturgy Energy Group are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, Naturgy Energy may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Binance Coin and Naturgy Energy

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

The idea behind Binance Coin and Naturgy Energy Group 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.