Correlation Between Binance Coin and Nextleaf Solutions

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

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

Diversification Opportunities for Binance Coin and Nextleaf Solutions

0.48

Correlation Coefficient

Binance Coin  Nextleaf Solutions

Very weak diversification

The 3 months correlation between Binance and Nextleaf is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Binance Coin and Nextleaf Solutions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nextleaf Solutions 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 Nextleaf Solutions. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nextleaf Solutions has no effect on the direction of Binance Coin i.e., Binance Coin and Nextleaf Solutions go up and down completely randomly.

Pair Corralation between Binance Coin and Nextleaf Solutions

Assuming the 90 days trading horizon Binance Coin is expected to under-perform the Nextleaf Solutions. But the crypto coin apears to be less risky and, when comparing its historical volatility, Binance Coin is 2.68 times less risky than Nextleaf Solutions. The crypto coin trades about -0.04 of its potential returns per unit of risk. The Nextleaf Solutions is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  5.25  in Nextleaf Solutions on December 22, 2024 and sell it today you would lose (0.75) from holding Nextleaf Solutions or give up 14.29% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	93.85%
Values	Daily Returns

Binance Coin  vs.  Nextleaf Solutions

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.

Nextleaf Solutions

Risk-Adjusted Performance

Very Weak

Over the last 90 days Nextleaf Solutions has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable technical and fundamental indicators, Nextleaf Solutions is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Binance Coin and Nextleaf Solutions

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

The idea behind Binance Coin and Nextleaf Solutions 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.