Correlation Between Binance Coin and IShares Trust

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

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

Diversification Opportunities for Binance Coin and IShares Trust

-0.71

Correlation Coefficient

Binance Coin  IShares Trust

Pay attention - limited upside

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

Pair Corralation between Binance Coin and IShares Trust

Assuming the 90 days trading horizon Binance Coin is expected to under-perform the IShares Trust. In addition to that, Binance Coin is 10.92 times more volatile than iShares Trust . It trades about -0.02 of its total potential returns per unit of risk. iShares Trust is currently generating about 0.15 per unit of volatility. If you would invest  2,016  in iShares Trust on December 20, 2024 and sell it today you would earn a total of  55.00  from holding iShares Trust or generate 2.73% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	95.24%
Values	Daily Returns

Binance Coin  vs.  iShares Trust

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 rather sound fundamental drivers, Binance Coin is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

iShares Trust

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in iShares Trust are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable fundamental indicators, IShares Trust is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Binance Coin and IShares Trust

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

The idea behind Binance Coin and iShares Trust 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.