Correlation Between Binance Coin and VanEck Morningstar

Can any of the company-specific risk be diversified away by investing in both Binance Coin and VanEck Morningstar 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 Morningstar 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 Morningstar Wide, you can compare the effects of market volatilities on Binance Coin and VanEck Morningstar 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 Morningstar. Check out your portfolio center. Please also check ongoing floating volatility patterns of Binance Coin and VanEck Morningstar.

Diversification Opportunities for Binance Coin and VanEck Morningstar

0.32

Correlation Coefficient

Binance Coin  VanEck Morningstar

Weak diversification

The 3 months correlation between Binance and VanEck is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Binance Coin and VanEck Morningstar Wide in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VanEck Morningstar Wide 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 Morningstar. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VanEck Morningstar Wide has no effect on the direction of Binance Coin i.e., Binance Coin and VanEck Morningstar go up and down completely randomly.

Pair Corralation between Binance Coin and VanEck Morningstar

Assuming the 90 days trading horizon Binance Coin is expected to under-perform the VanEck Morningstar. In addition to that, Binance Coin is 1.94 times more volatile than VanEck Morningstar Wide. It trades about -0.01 of its total potential returns per unit of risk. VanEck Morningstar Wide is currently generating about 0.11 per unit of volatility. If you would invest  3,125  in VanEck Morningstar Wide on October 26, 2024 and sell it today you would earn a total of  54.00  from holding VanEck Morningstar Wide or generate 1.73% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	85.71%
Values	Daily Returns

Binance Coin  vs.  VanEck Morningstar Wide

Binance Coin

Risk-Adjusted Performance

6 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Binance Coin are ranked lower than 6 (%) 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.

VanEck Morningstar Wide

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in VanEck Morningstar Wide are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, VanEck Morningstar is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Binance Coin and VanEck Morningstar

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

The idea behind Binance Coin and VanEck Morningstar Wide 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.