Correlation Between Binance Coin and IShares Core

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

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

Diversification Opportunities for Binance Coin and IShares Core

0.68

Correlation Coefficient

Binance Coin  IShares Core

Poor diversification

The 3 months correlation between Binance and IShares is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Binance Coin and iShares Core MSCI in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Core MSCI 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 IShares Core. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Core MSCI has no effect on the direction of Binance Coin i.e., Binance Coin and IShares Core go up and down completely randomly.

Pair Corralation between Binance Coin and IShares Core

Assuming the 90 days trading horizon Binance Coin is expected to generate 11.86 times more return on investment than IShares Core. However, Binance Coin is 11.86 times more volatile than iShares Core MSCI. It trades about 0.06 of its potential returns per unit of risk. iShares Core MSCI is currently generating about 0.1 per unit of risk. If you would invest  29,465  in Binance Coin on October 9, 2024 and sell it today you would earn a total of  43,505  from holding Binance Coin or generate 147.65% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	60.37%
Values	Daily Returns

Binance Coin  vs.  iShares Core MSCI

Binance Coin

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Binance Coin are ranked lower than 11 (%) 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.

iShares Core MSCI

Risk-Adjusted Performance

0 of 100

Insignificant

Over the last 90 days iShares Core MSCI has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, IShares Core is not utilizing all of its potentials. The current stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Binance Coin and IShares Core

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

The idea behind Binance Coin and iShares Core MSCI 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.