Correlation Between Binance Coin and JPMorgan International

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

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

Diversification Opportunities for Binance Coin and JPMorgan International

-0.21

Correlation Coefficient

Binance Coin  JPMorgan International

Very good diversification

The 3 months correlation between Binance and JPMorgan is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding Binance Coin and JPMorgan International Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JPMorgan International 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 JPMorgan International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JPMorgan International has no effect on the direction of Binance Coin i.e., Binance Coin and JPMorgan International go up and down completely randomly.

Pair Corralation between Binance Coin and JPMorgan International

Assuming the 90 days trading horizon Binance Coin is expected to generate 3.08 times more return on investment than JPMorgan International. However, Binance Coin is 3.08 times more volatile than JPMorgan International Growth. It trades about -0.03 of its potential returns per unit of risk. JPMorgan International Growth is currently generating about -0.27 per unit of risk. If you would invest  71,176  in Binance Coin on October 11, 2024 and sell it today you would lose (1,586) from holding Binance Coin or give up 2.23% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Binance Coin  vs.  JPMorgan International Growth

Binance Coin

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Binance Coin are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady fundamental drivers, Binance Coin exhibited solid returns over the last few months and may actually be approaching a breakup point.

JPMorgan International

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days JPMorgan International Growth has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest abnormal performance, the Etf's forward indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the Exchange Traded Fund stockholders.

Pair Trading with Binance Coin and JPMorgan International

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

The idea behind Binance Coin and JPMorgan International Growth 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.