Correlation Between Binance Coin and Applied Digital
Can any of the company-specific risk be diversified away by investing in both Binance Coin and Applied Digital 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 Applied Digital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Binance Coin and Applied Digital, you can compare the effects of market volatilities on Binance Coin and Applied Digital 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 Applied Digital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Binance Coin and Applied Digital.
Diversification Opportunities for Binance Coin and Applied Digital
0.49 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Binance and Applied is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Binance Coin and Applied Digital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Applied Digital 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 Applied Digital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Applied Digital has no effect on the direction of Binance Coin i.e., Binance Coin and Applied Digital go up and down completely randomly.
Pair Corralation between Binance Coin and Applied Digital
Assuming the 90 days trading horizon Binance Coin is expected to under-perform the Applied Digital. But the crypto coin apears to be less risky and, when comparing its historical volatility, Binance Coin is 3.97 times less risky than Applied Digital. The crypto coin trades about -0.02 of its potential returns per unit of risk. The Applied Digital is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 877.00 in Applied Digital on October 25, 2024 and sell it today you would earn a total of 87.00 from holding Applied Digital or generate 9.92% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 85.71% |
| Values | Daily Returns |
Binance Coin vs. Applied Digital
Performance |
| Timeline |
| Binance Coin |
| Applied Digital |
Binance Coin and Applied Digital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Binance Coin and Applied Digital
The main advantage of trading using opposite Binance Coin and Applied Digital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Binance Coin position performs unexpectedly, Applied Digital 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 Applied Digital will offset losses from the drop in Applied Digital's long position.| Binance Coin vs. Staked Ether | Binance Coin vs. Cronos | Binance Coin vs. Wrapped Bitcoin | Binance Coin vs. Monero |
| Applied Digital vs. Magic Empire Global | Applied Digital vs. Zhong Yang Financial | Applied Digital vs. Netcapital | Applied Digital vs. Lazard |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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