Correlation Between Binance Coin and REP
Can any of the company-specific risk be diversified away by investing in both Binance Coin and REP 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 REP into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Binance Coin and REP, you can compare the effects of market volatilities on Binance Coin and REP 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 REP. Check out your portfolio center. Please also check ongoing floating volatility patterns of Binance Coin and REP.
Diversification Opportunities for Binance Coin and REP
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Binance and REP is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Binance Coin and REP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on REP 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 REP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of REP has no effect on the direction of Binance Coin i.e., Binance Coin and REP go up and down completely randomly.
Pair Corralation between Binance Coin and REP
Assuming the 90 days trading horizon Binance Coin is expected to generate 0.61 times more return on investment than REP. However, Binance Coin is 1.63 times less risky than REP. It trades about 0.01 of its potential returns per unit of risk. REP is currently generating about -0.22 per unit of risk. If you would invest 55,368 in Binance Coin on January 20, 2024 and sell it today you would lose (358.00) from holding Binance Coin or give up 0.65% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Binance Coin vs. REP
Performance |
| Timeline |
| Binance Coin |
| REP |
Binance Coin and REP Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Binance Coin and REP
The main advantage of trading using opposite Binance Coin and REP positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Binance Coin position performs unexpectedly, REP 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 REP will offset losses from the drop in REP'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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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