Correlation Between Monero and Binance Coin

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

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

Diversification Opportunities for Monero and Binance Coin

-0.27

Correlation Coefficient

Monero  Binance Coin

Very good diversification

The 3 months correlation between Monero and Binance is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding Monero and Binance Coin in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Binance Coin and Monero 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 Monero are associated (or correlated) with Binance Coin. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Binance Coin has no effect on the direction of Monero i.e., Monero and Binance Coin go up and down completely randomly.

Pair Corralation between Monero and Binance Coin

Assuming the 90 days trading horizon Monero is expected to generate 0.98 times more return on investment than Binance Coin. However, Monero is 1.02 times less risky than Binance Coin. It trades about 0.07 of its potential returns per unit of risk. Binance Coin is currently generating about -0.03 per unit of risk. If you would invest  19,027  in Monero on December 22, 2024 and sell it today you would earn a total of  2,087  from holding Monero or generate 10.97% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Monero  vs.  Binance Coin

Monero

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Monero are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, Monero exhibited solid returns over the last few months and may actually be approaching a breakup point.

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.

Pair Trading with Monero and Binance Coin

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

The idea behind Monero and Binance Coin 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.

Check out your portfolio center.

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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.