Correlation Between Binance Coin and Theta Network
Can any of the company-specific risk be diversified away by investing in both Binance Coin and Theta Network 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 Theta Network into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Binance Coin and Theta Network, you can compare the effects of market volatilities on Binance Coin and Theta Network 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 Theta Network. Check out your portfolio center. Please also check ongoing floating volatility patterns of Binance Coin and Theta Network.
Diversification Opportunities for Binance Coin and Theta Network
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Binance and Theta is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Binance Coin and Theta Network in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Theta Network 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 Theta Network. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Theta Network has no effect on the direction of Binance Coin i.e., Binance Coin and Theta Network go up and down completely randomly.
Pair Corralation between Binance Coin and Theta Network
Assuming the 90 days trading horizon Binance Coin is expected to generate 0.54 times more return on investment than Theta Network. However, Binance Coin is 1.86 times less risky than Theta Network. It trades about 0.09 of its potential returns per unit of risk. Theta Network is currently generating about -0.13 per unit of risk. If you would invest 57,401 in Binance Coin on January 26, 2024 and sell it today you would earn a total of 3,219 from holding Binance Coin or generate 5.61% 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. Theta Network
Performance |
| Timeline |
| Binance Coin |
| Theta Network |
Binance Coin and Theta Network Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Binance Coin and Theta Network
The main advantage of trading using opposite Binance Coin and Theta Network positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Binance Coin position performs unexpectedly, Theta Network 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 Theta Network will offset losses from the drop in Theta Network's long position.| Binance Coin vs. Staked Ether | Binance Coin vs. Cronos | Binance Coin vs. Wrapped Bitcoin | Binance Coin vs. Monero |
| Theta Network vs. Solana | Theta Network vs. XRP | Theta Network vs. Staked Ether | Theta Network vs. The Open Network |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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