Correlation Between Binance Coin and NuShares ETF

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

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

Diversification Opportunities for Binance Coin and NuShares ETF

-0.37

Correlation Coefficient

Binance Coin  NuShares ETF

Very good diversification

The 3 months correlation between Binance and NuShares is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Binance Coin and NuShares ETF Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NuShares ETF 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 NuShares ETF. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NuShares ETF Trust has no effect on the direction of Binance Coin i.e., Binance Coin and NuShares ETF go up and down completely randomly.

Pair Corralation between Binance Coin and NuShares ETF

Assuming the 90 days trading horizon Binance Coin is expected to under-perform the NuShares ETF. In addition to that, Binance Coin is 2.9 times more volatile than NuShares ETF Trust. It trades about -0.04 of its total potential returns per unit of risk. NuShares ETF Trust is currently generating about 0.04 per unit of volatility. If you would invest  2,942  in NuShares ETF Trust on December 21, 2024 and sell it today you would earn a total of  74.00  from holding NuShares ETF Trust or generate 2.52% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	93.65%
Values	Daily Returns

Binance Coin  vs.  NuShares ETF 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 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.

NuShares ETF Trust

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in NuShares ETF Trust are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy technical and fundamental indicators, NuShares ETF is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Binance Coin and NuShares ETF

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

The idea behind Binance Coin and NuShares ETF 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.

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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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.