Correlation Between Anchor Protocol and Binance Coin

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Can any of the company-specific risk be diversified away by investing in both Anchor Protocol 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 Anchor Protocol and Binance Coin into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Anchor Protocol and Binance Coin, you can compare the effects of market volatilities on Anchor Protocol 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 Anchor Protocol with a short position of Binance Coin. Check out your portfolio center. Please also check ongoing floating volatility patterns of Anchor Protocol and Binance Coin.

Diversification Opportunities for Anchor Protocol and Binance Coin

0.58
  Correlation Coefficient

Very weak diversification

The 3 months correlation between Anchor and Binance is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Anchor Protocol and Binance Coin in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Binance Coin and Anchor Protocol 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 Anchor Protocol 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 Anchor Protocol i.e., Anchor Protocol and Binance Coin go up and down completely randomly.

Pair Corralation between Anchor Protocol and Binance Coin

Assuming the 90 days trading horizon Anchor Protocol is expected to generate 23.15 times more return on investment than Binance Coin. However, Anchor Protocol is 23.15 times more volatile than Binance Coin. It trades about 0.1 of its potential returns per unit of risk. Binance Coin is currently generating about -0.09 per unit of risk. If you would invest  0.00  in Anchor Protocol on February 24, 2022 and sell it today you would earn a total of  34.00  from holding Anchor Protocol or generate 9.223372036854776E16% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

Anchor Protocol  vs.  Binance Coin

 Performance (%) 
      Timeline 
Anchor Protocol 
Anchor Performance
4 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Anchor Protocol are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Anchor Protocol sustained solid returns over the last few months and may actually be approaching a breakup point.

Anchor Price Channel

Binance Coin 
Binance Performance
0 of 100
Over the last 90 days Binance Coin has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Crypto's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for Binance Coin investors.

Binance Price Channel

Anchor Protocol and Binance Coin Volatility Contrast

 Predicted Return Density 
      Returns 

Pair Trading with Anchor Protocol and Binance Coin

The main advantage of trading using opposite Anchor Protocol and Binance Coin positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Anchor Protocol 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 Anchor Protocol 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

Pair trading matchups for Binance Coin

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 Global Correlations module to find global opportunities by holding instruments from different markets.

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