Correlation Between Binance Coin and Invesco PHLX

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

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

Diversification Opportunities for Binance Coin and Invesco PHLX

-0.32

Correlation Coefficient

Binance Coin  Invesco PHLX

Very good diversification

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

Pair Corralation between Binance Coin and Invesco PHLX

Assuming the 90 days trading horizon Binance Coin is expected to generate 1.6 times more return on investment than Invesco PHLX. However, Binance Coin is 1.6 times more volatile than Invesco PHLX Semiconductor. It trades about 0.11 of its potential returns per unit of risk. Invesco PHLX Semiconductor is currently generating about 0.04 per unit of risk. If you would invest  58,263  in Binance Coin on October 25, 2024 and sell it today you would earn a total of  11,337  from holding Binance Coin or generate 19.46% 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.  Invesco PHLX Semiconductor

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.

Invesco PHLX Semicon

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Invesco PHLX Semiconductor are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable basic indicators, Invesco PHLX is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Binance Coin and Invesco PHLX

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

The idea behind Binance Coin and Invesco PHLX Semiconductor 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.