Correlation Between XRP and Capricorn Metals
Can any of the company-specific risk be diversified away by investing in both XRP and Capricorn Metals 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 Capricorn Metals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between XRP and Capricorn Metals, you can compare the effects of market volatilities on XRP and Capricorn Metals 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 Capricorn Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of XRP and Capricorn Metals.
Diversification Opportunities for XRP and Capricorn Metals
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between XRP and Capricorn is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding XRP and Capricorn Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Capricorn Metals 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 Capricorn Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Capricorn Metals has no effect on the direction of XRP i.e., XRP and Capricorn Metals go up and down completely randomly.
Pair Corralation between XRP and Capricorn Metals
Assuming the 90 days trading horizon XRP is expected to generate 2.85 times more return on investment than Capricorn Metals. However, XRP is 2.85 times more volatile than Capricorn Metals. It trades about 0.27 of its potential returns per unit of risk. Capricorn Metals is currently generating about 0.13 per unit of risk. If you would invest 56.00 in XRP on November 2, 2024 and sell it today you would earn a total of 257.00 from holding XRP or generate 458.93% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 97.2% |
| Values | Daily Returns |
XRP vs. Capricorn Metals
Performance |
| Timeline |
| XRP |
| Capricorn Metals |
XRP and Capricorn Metals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with XRP and Capricorn Metals
The main advantage of trading using opposite XRP and Capricorn Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if XRP position performs unexpectedly, Capricorn Metals 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 Capricorn Metals will offset losses from the drop in Capricorn Metals' long position.The idea behind XRP and Capricorn Metals 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.| Capricorn Metals vs. Perseus Mining | Capricorn Metals vs. Hutchison Telecommunications | Capricorn Metals vs. Viva Leisure | Capricorn Metals vs. MetalsGrove Mining |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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