Correlation Between SafePal and Binance Coin
Can any of the company-specific risk be diversified away by investing in both SafePal and Binance Coin 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 SafePal and Binance Coin into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SafePal and Binance Coin, you can compare the effects of market volatilities on SafePal and Binance Coin 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 SafePal with a short position of Binance Coin. Check out your portfolio center. Please also check ongoing floating volatility patterns of SafePal and Binance Coin.
Diversification Opportunities for SafePal and Binance Coin
-0.55 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between SafePal and Binance is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding SafePal and Binance Coin in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Binance Coin and SafePal 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 SafePal are associated (or correlated) with Binance Coin. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Binance Coin has no effect on the direction of SafePal i.e., SafePal and Binance Coin go up and down completely randomly.
Pair Corralation between SafePal and Binance Coin
Assuming the 90 days trading horizon SafePal is expected to under-perform the Binance Coin. In addition to that, SafePal is 1.05 times more volatile than Binance Coin. It trades about -0.01 of its total potential returns per unit of risk. Binance Coin is currently generating about 0.03 per unit of volatility. If you would invest 60,233 in Binance Coin on August 27, 2024 and sell it today you would earn a total of 4,849 from holding Binance Coin or generate 8.05% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
SafePal vs. Binance Coin
Performance |
| Timeline |
| SafePal |
| Binance Coin |
SafePal and Binance Coin Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SafePal and Binance Coin
The main advantage of trading using opposite SafePal and Binance Coin positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SafePal position performs unexpectedly, Binance Coin 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 Binance Coin will offset losses from the drop in Binance Coin's long position.The idea behind SafePal and Binance Coin pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Binance Coin vs. Staked Ether | Binance Coin vs. Cronos | Binance Coin vs. Wrapped Bitcoin | Binance Coin vs. XMR |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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