Correlation Between Binance Coin and Xtrackers MSCI

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

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

Diversification Opportunities for Binance Coin and Xtrackers MSCI

0.0

Correlation Coefficient

Binance Coin  Xtrackers MSCI

Pay attention - limited upside

The 3 months correlation between Binance and Xtrackers is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Binance Coin and Xtrackers MSCI World in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xtrackers MSCI World 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 Xtrackers MSCI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Xtrackers MSCI World has no effect on the direction of Binance Coin i.e., Binance Coin and Xtrackers MSCI go up and down completely randomly.

Pair Corralation between Binance Coin and Xtrackers MSCI

Assuming the 90 days trading horizon Binance Coin is expected to generate 2.26 times more return on investment than Xtrackers MSCI. However, Binance Coin is 2.26 times more volatile than Xtrackers MSCI World. It trades about -0.04 of its potential returns per unit of risk. Xtrackers MSCI World is currently generating about -0.15 per unit of risk. If you would invest  70,610  in Binance Coin on October 12, 2024 and sell it today you would lose (1,840) from holding Binance Coin or give up 2.61% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	76.19%
Values	Daily Returns

Binance Coin  vs.  Xtrackers MSCI World

Binance Coin

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Binance Coin are ranked lower than 7 (%) 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.

Xtrackers MSCI World

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Binance Coin and Xtrackers MSCI

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

The idea behind Binance Coin and Xtrackers MSCI World 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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.