Correlation Between Binance Coin and SPROUTS FARMERS
Can any of the company-specific risk be diversified away by investing in both Binance Coin and SPROUTS FARMERS 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 SPROUTS FARMERS into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Binance Coin and SPROUTS FARMERS MKT, you can compare the effects of market volatilities on Binance Coin and SPROUTS FARMERS 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 SPROUTS FARMERS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Binance Coin and SPROUTS FARMERS.
Diversification Opportunities for Binance Coin and SPROUTS FARMERS
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Binance and SPROUTS is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Binance Coin and SPROUTS FARMERS MKT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPROUTS FARMERS MKT 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 SPROUTS FARMERS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SPROUTS FARMERS MKT has no effect on the direction of Binance Coin i.e., Binance Coin and SPROUTS FARMERS go up and down completely randomly.
Pair Corralation between Binance Coin and SPROUTS FARMERS
Assuming the 90 days trading horizon Binance Coin is expected to generate 1.55 times more return on investment than SPROUTS FARMERS. However, Binance Coin is 1.55 times more volatile than SPROUTS FARMERS MKT. It trades about 0.04 of its potential returns per unit of risk. SPROUTS FARMERS MKT is currently generating about -0.01 per unit of risk. If you would invest 65,399 in Binance Coin on October 30, 2024 and sell it today you would earn a total of 2,311 from holding Binance Coin or generate 3.53% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 90.24% |
| Values | Daily Returns |
Binance Coin vs. SPROUTS FARMERS MKT
Performance |
| Timeline |
| Binance Coin |
| SPROUTS FARMERS MKT |
Binance Coin and SPROUTS FARMERS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Binance Coin and SPROUTS FARMERS
The main advantage of trading using opposite Binance Coin and SPROUTS FARMERS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Binance Coin position performs unexpectedly, SPROUTS FARMERS 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 SPROUTS FARMERS will offset losses from the drop in SPROUTS FARMERS's long position.| Binance Coin vs. Staked Ether | Binance Coin vs. Cronos | Binance Coin vs. Wrapped Bitcoin | Binance Coin vs. Monero |
| SPROUTS FARMERS vs. Align Technology | SPROUTS FARMERS vs. Easy Software AG | SPROUTS FARMERS vs. Charter Communications | SPROUTS FARMERS vs. ARROW ELECTRONICS |
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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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