Correlation Between Binance Coin and NEO
Can any of the company-specific risk be diversified away by investing in both Binance Coin and NEO 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 NEO into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Binance Coin and NEO, you can compare the effects of market volatilities on Binance Coin and NEO 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 NEO. Check out your portfolio center. Please also check ongoing floating volatility patterns of Binance Coin and NEO.
Diversification Opportunities for Binance Coin and NEO
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Binance and NEO is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Binance Coin and NEO in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NEO 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 NEO. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NEO has no effect on the direction of Binance Coin i.e., Binance Coin and NEO go up and down completely randomly.
Pair Corralation between Binance Coin and NEO
Assuming the 90 days trading horizon Binance Coin is expected to under-perform the NEO. But the crypto coin apears to be less risky and, when comparing its historical volatility, Binance Coin is 2.57 times less risky than NEO. The crypto coin trades about -0.03 of its potential returns per unit of risk. The NEO is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 1,473 in NEO on January 19, 2024 and sell it today you would earn a total of 237.00 from holding NEO or generate 16.09% 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. NEO
Performance |
| Timeline |
| Binance Coin |
| NEO |
Binance Coin and NEO Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Binance Coin and NEO
The main advantage of trading using opposite Binance Coin and NEO positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Binance Coin position performs unexpectedly, NEO 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 NEO will offset losses from the drop in NEO'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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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