Correlation Between XRP and Arkham
Can any of the company-specific risk be diversified away by investing in both XRP and Arkham 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 XRP and Arkham into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between XRP and Arkham, you can compare the effects of market volatilities on XRP and Arkham 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 XRP with a short position of Arkham. Check out your portfolio center. Please also check ongoing floating volatility patterns of XRP and Arkham.
Diversification Opportunities for XRP and Arkham
Excellent diversification
The 3 months correlation between XRP and Arkham is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding XRP and Arkham in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Arkham and XRP 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 XRP are associated (or correlated) with Arkham. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Arkham has no effect on the direction of XRP i.e., XRP and Arkham go up and down completely randomly.
Pair Corralation between XRP and Arkham
Assuming the 90 days trading horizon XRP is expected to generate 0.61 times more return on investment than Arkham. However, XRP is 1.64 times less risky than Arkham. It trades about 0.12 of its potential returns per unit of risk. Arkham is currently generating about 0.05 per unit of risk. If you would invest 58.00 in XRP on November 9, 2024 and sell it today you would earn a total of 175.00 from holding XRP or generate 301.72% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
XRP vs. Arkham
Performance |
| Timeline |
| XRP |
| Arkham |
XRP and Arkham Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with XRP and Arkham
The main advantage of trading using opposite XRP and Arkham positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if XRP position performs unexpectedly, Arkham 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 Arkham will offset losses from the drop in Arkham's long position.The idea behind XRP and Arkham 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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