Correlation Between Binance Coin and Marriott Vacations

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

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

Diversification Opportunities for Binance Coin and Marriott Vacations

0.64

Correlation Coefficient

Binance Coin  Marriott Vacations

Poor diversification

The 3 months correlation between Binance and Marriott is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Binance Coin and Marriott Vacations Worldwide in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Marriott Vacations 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 Marriott Vacations. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Marriott Vacations has no effect on the direction of Binance Coin i.e., Binance Coin and Marriott Vacations go up and down completely randomly.

Pair Corralation between Binance Coin and Marriott Vacations

Assuming the 90 days trading horizon Binance Coin is expected to generate 1.16 times more return on investment than Marriott Vacations. However, Binance Coin is 1.16 times more volatile than Marriott Vacations Worldwide. It trades about 0.01 of its potential returns per unit of risk. Marriott Vacations Worldwide is currently generating about -0.15 per unit of risk. If you would invest  69,646  in Binance Coin on October 24, 2024 and sell it today you would lose (46.00) from holding Binance Coin or give up 0.07% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	81.82%
Values	Daily Returns

Binance Coin  vs.  Marriott Vacations Worldwide

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.

Marriott Vacations

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Marriott Vacations Worldwide are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady basic indicators, Marriott Vacations reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Binance Coin and Marriott Vacations

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

The idea behind Binance Coin and Marriott Vacations Worldwide 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.