Correlation Between Binance Coin and Decentraland
Can any of the company-specific risk be diversified away by investing in both Binance Coin and Decentraland 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 Decentraland into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Binance Coin and Decentraland, you can compare the effects of market volatilities on Binance Coin and Decentraland 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 Decentraland. Check out your portfolio center. Please also check ongoing floating volatility patterns of Binance Coin and Decentraland.
Diversification Opportunities for Binance Coin and Decentraland
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Binance and Decentraland is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Binance Coin and Decentraland in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Decentraland 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 Decentraland. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Decentraland has no effect on the direction of Binance Coin i.e., Binance Coin and Decentraland go up and down completely randomly.
Pair Corralation between Binance Coin and Decentraland
Assuming the 90 days trading horizon Binance Coin is expected to generate 1.02 times more return on investment than Decentraland. However, Binance Coin is 1.02 times more volatile than Decentraland. It trades about 0.26 of its potential returns per unit of risk. Decentraland is currently generating about 0.13 per unit of risk. If you would invest 41,517 in Binance Coin on December 29, 2023 and sell it today you would earn a total of 16,683 from holding Binance Coin or generate 40.18% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Strong |
Accuracy | 100.0% |
Values | Daily Returns |
Binance Coin vs. Decentraland
Performance |
Timeline |
Binance Coin |
Decentraland |
Binance Coin and Decentraland Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Binance Coin and Decentraland
The main advantage of trading using opposite Binance Coin and Decentraland positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Binance Coin position performs unexpectedly, Decentraland 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 Decentraland will offset losses from the drop in Decentraland'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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
Other Complementary Tools
Portfolio File Import Quickly import all of your third-party portfolios from your local drive in csv format | |
Latest Portfolios Quick portfolio dashboard that showcases your latest portfolios | |
Instant Ratings Determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
Sectors List of equity sectors categorizing publicly traded companies based on their primary business activities | |
Correlation Analysis Reduce portfolio risk simply by holding instruments which are not perfectly correlated | |
Bollinger Bands Use Bollinger Bands indicator to analyze target price for a given investing horizon | |
Content Syndication Quickly integrate customizable finance content to your own investment portal | |
Pair Correlation Compare performance and examine fundamental relationship between any two equity instruments | |
Portfolio Manager State of the art Portfolio Manager to monitor and improve performance of your invested capital | |
CEOs Directory Screen CEOs from public companies around the world | |
Commodity Channel Use Commodity Channel Index to analyze current equity momentum | |
Piotroski F Score Get Piotroski F Score based on the binary analysis strategy of nine different fundamentals |