Correlation Between Binance Coin and Chainlink
Can any of the company-specific risk be diversified away by investing in both Binance Coin and Chainlink 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 Chainlink into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Binance Coin and Chainlink, you can compare the effects of market volatilities on Binance Coin and Chainlink 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 Chainlink. Check out your portfolio center. Please also check ongoing floating volatility patterns of Binance Coin and Chainlink.
Diversification Opportunities for Binance Coin and Chainlink
0.08 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Binance and Chainlink is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Binance Coin and Chainlink in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chainlink 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 Chainlink. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chainlink has no effect on the direction of Binance Coin i.e., Binance Coin and Chainlink go up and down completely randomly.
Pair Corralation between Binance Coin and Chainlink
Assuming the 90 days trading horizon Binance Coin is expected to generate 0.75 times more return on investment than Chainlink. However, Binance Coin is 1.33 times less risky than Chainlink. It trades about 0.07 of its potential returns per unit of risk. Chainlink is currently generating about -0.23 per unit of risk. If you would invest 58,029 in Binance Coin on January 24, 2024 and sell it today you would earn a total of 2,201 from holding Binance Coin or generate 3.79% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Binance Coin vs. Chainlink
Performance |
| Timeline |
| Binance Coin |
| Chainlink |
Binance Coin and Chainlink Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Binance Coin and Chainlink
The main advantage of trading using opposite Binance Coin and Chainlink positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Binance Coin position performs unexpectedly, Chainlink 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 Chainlink will offset losses from the drop in Chainlink's long position.| Binance Coin vs. Staked Ether | Binance Coin vs. Cronos | Binance Coin vs. Wrapped Bitcoin | Binance Coin vs. Monero |
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 Anywhere module to track or share privately all of your investments from the convenience of any device.
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