Correlation Between XMR and USD Coin
Can any of the company-specific risk be diversified away by investing in both XMR and USD 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 XMR and USD Coin into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between XMR and USD Coin, you can compare the effects of market volatilities on XMR and USD 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 XMR with a short position of USD Coin. Check out your portfolio center. Please also check ongoing floating volatility patterns of XMR and USD Coin.
Diversification Opportunities for XMR and USD Coin
Pay attention - limited upside
The 3 months correlation between XMR and USD is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding XMR and USD Coin in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on USD Coin and XMR 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 XMR are associated (or correlated) with USD Coin. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of USD Coin has no effect on the direction of XMR i.e., XMR and USD Coin go up and down completely randomly.
Pair Corralation between XMR and USD Coin
Assuming the 90 days trading horizon XMR is expected to generate 11.2 times more return on investment than USD Coin. However, XMR is 11.2 times more volatile than USD Coin. It trades about 0.03 of its potential returns per unit of risk. USD Coin is currently generating about 0.0 per unit of risk. If you would invest 14,498 in XMR on August 23, 2024 and sell it today you would earn a total of 1,600 from holding XMR or generate 11.04% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
XMR vs. USD Coin
Performance |
| Timeline |
| XMR |
| USD Coin |
XMR and USD Coin Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with XMR and USD Coin
The main advantage of trading using opposite XMR and USD Coin positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if XMR position performs unexpectedly, USD 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 USD Coin will offset losses from the drop in USD Coin's long position.The idea behind XMR and USD 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.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.
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