Correlation Between SPACE and XRP
Can any of the company-specific risk be diversified away by investing in both SPACE and XRP 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 SPACE and XRP into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SPACE and XRP, you can compare the effects of market volatilities on SPACE and XRP 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 SPACE with a short position of XRP. Check out your portfolio center. Please also check ongoing floating volatility patterns of SPACE and XRP.
Diversification Opportunities for SPACE and XRP
Very poor diversification
The 3 months correlation between SPACE and XRP is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding SPACE and XRP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on XRP and SPACE 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 SPACE are associated (or correlated) with XRP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of XRP has no effect on the direction of SPACE i.e., SPACE and XRP go up and down completely randomly.
Pair Corralation between SPACE and XRP
Assuming the 90 days horizon SPACE is expected to generate 18.71 times more return on investment than XRP. However, SPACE is 18.71 times more volatile than XRP. It trades about 0.16 of its potential returns per unit of risk. XRP is currently generating about 0.13 per unit of risk. If you would invest 2.76 in SPACE on September 1, 2024 and sell it today you would earn a total of 53.24 from holding SPACE or generate 1928.99% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 96.05% |
| Values | Daily Returns |
SPACE vs. XRP
Performance |
| Timeline |
| SPACE |
| XRP |
SPACE and XRP Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SPACE and XRP
The main advantage of trading using opposite SPACE and XRP positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SPACE position performs unexpectedly, XRP 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 XRP will offset losses from the drop in XRP's long position.The idea behind SPACE and XRP 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.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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
Other Complementary Tools
| Sign In To Macroaxis Sign in to explore Macroaxis' wealth optimization platform and fintech modules | |
| Portfolio Suggestion Get suggestions outside of your existing asset allocation including your own model portfolios | |
| Portfolio Dashboard Portfolio dashboard that provides centralized access to all your investments | |
| Bollinger Bands Use Bollinger Bands indicator to analyze target price for a given investing horizon | |
| Efficient Frontier Plot and analyze your portfolio and positions against risk-return landscape of the market. |