Correlation Between XRP and SPDR SP
Can any of the company-specific risk be diversified away by investing in both XRP and SPDR SP 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 SPDR SP into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between XRP and SPDR SP Global, you can compare the effects of market volatilities on XRP and SPDR SP 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 SPDR SP. Check out your portfolio center. Please also check ongoing floating volatility patterns of XRP and SPDR SP.
Diversification Opportunities for XRP and SPDR SP
Very good diversification
The 3 months correlation between XRP and SPDR is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding XRP and SPDR SP Global in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPDR SP Global 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 SPDR SP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SPDR SP Global has no effect on the direction of XRP i.e., XRP and SPDR SP go up and down completely randomly.
Pair Corralation between XRP and SPDR SP
Assuming the 90 days trading horizon XRP is expected to generate 6.79 times more return on investment than SPDR SP. However, XRP is 6.79 times more volatile than SPDR SP Global. It trades about 0.13 of its potential returns per unit of risk. SPDR SP Global is currently generating about 0.0 per unit of risk. If you would invest 38.00 in XRP on November 2, 2024 and sell it today you would earn a total of 275.00 from holding XRP or generate 723.68% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 60.32% |
| Values | Daily Returns |
XRP vs. SPDR SP Global
Performance |
| Timeline |
| XRP |
| SPDR SP Global |
XRP and SPDR SP Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with XRP and SPDR SP
The main advantage of trading using opposite XRP and SPDR SP positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if XRP position performs unexpectedly, SPDR SP 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 SPDR SP will offset losses from the drop in SPDR SP's long position.The idea behind XRP and SPDR SP Global 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.| SPDR SP vs. FlexShares Morningstar Global | SPDR SP vs. SPDR SP North | SPDR SP vs. abrdn Physical Precious | SPDR SP vs. SPDR SP Global |
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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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