Correlation Between Binance Coin and VanEck Vectors

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

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

Diversification Opportunities for Binance Coin and VanEck Vectors

-0.7

Correlation Coefficient

Binance Coin  VanEck Vectors

Excellent diversification

The 3 months correlation between Binance and VanEck is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding Binance Coin and VanEck Vectors ETF in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VanEck Vectors ETF 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 VanEck Vectors. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VanEck Vectors ETF has no effect on the direction of Binance Coin i.e., Binance Coin and VanEck Vectors go up and down completely randomly.

Pair Corralation between Binance Coin and VanEck Vectors

Assuming the 90 days trading horizon Binance Coin is expected to under-perform the VanEck Vectors. In addition to that, Binance Coin is 1.72 times more volatile than VanEck Vectors ETF. It trades about -0.03 of its total potential returns per unit of risk. VanEck Vectors ETF is currently generating about 0.26 per unit of volatility. If you would invest  68,201  in VanEck Vectors ETF on December 22, 2024 and sell it today you would earn a total of  21,799  from holding VanEck Vectors ETF or generate 31.96% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	95.31%
Values	Daily Returns

Binance Coin  vs.  VanEck Vectors ETF

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.

VanEck Vectors ETF

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in VanEck Vectors ETF are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, VanEck Vectors showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Binance Coin and VanEck Vectors

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

The idea behind Binance Coin and VanEck Vectors ETF 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.