Correlation Between Binance Coin and Polygon
Can any of the company-specific risk be diversified away by investing in both Binance Coin and Polygon 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 Polygon into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Binance Coin and Polygon, you can compare the effects of market volatilities on Binance Coin and Polygon 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 Polygon. Check out your portfolio center. Please also check ongoing floating volatility patterns of Binance Coin and Polygon.
Diversification Opportunities for Binance Coin and Polygon
0.4 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Binance and Polygon is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Binance Coin and Polygon in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Polygon 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 Polygon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Polygon has no effect on the direction of Binance Coin i.e., Binance Coin and Polygon go up and down completely randomly.
Pair Corralation between Binance Coin and Polygon
Assuming the 90 days trading horizon Binance Coin is expected to generate 0.62 times more return on investment than Polygon. However, Binance Coin is 1.61 times less risky than Polygon. It trades about 0.05 of its potential returns per unit of risk. Polygon is currently generating about 0.03 per unit of risk. If you would invest 32,061 in Binance Coin on January 20, 2024 and sell it today you would earn a total of 22,949 from holding Binance Coin or generate 71.58% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Binance Coin vs. Polygon
Performance |
| Timeline |
| Binance Coin |
| Polygon |
Binance Coin and Polygon Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Binance Coin and Polygon
The main advantage of trading using opposite Binance Coin and Polygon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Binance Coin position performs unexpectedly, Polygon 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 Polygon will offset losses from the drop in Polygon'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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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