Correlation Between XRP and Global Absolute
Can any of the company-specific risk be diversified away by investing in both XRP and Global Absolute 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 Global Absolute into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between XRP and Global Absolute Return, you can compare the effects of market volatilities on XRP and Global Absolute 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 Global Absolute. Check out your portfolio center. Please also check ongoing floating volatility patterns of XRP and Global Absolute.
Diversification Opportunities for XRP and Global Absolute
-0.01 | Correlation Coefficient |
Good diversification
The 3 months correlation between XRP and Global is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding XRP and Global Absolute Return in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global Absolute Return 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 Global Absolute. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global Absolute Return has no effect on the direction of XRP i.e., XRP and Global Absolute go up and down completely randomly.
Pair Corralation between XRP and Global Absolute
Assuming the 90 days trading horizon XRP is expected to generate 14.09 times more return on investment than Global Absolute. However, XRP is 14.09 times more volatile than Global Absolute Return. It trades about 0.34 of its potential returns per unit of risk. Global Absolute Return is currently generating about 0.01 per unit of risk. If you would invest 224.00 in XRP on October 21, 2024 and sell it today you would earn a total of 105.00 from holding XRP or generate 46.87% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 90.48% |
| Values | Daily Returns |
XRP vs. Global Absolute Return
Performance |
| Timeline |
| XRP |
| Global Absolute Return |
XRP and Global Absolute Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with XRP and Global Absolute
The main advantage of trading using opposite XRP and Global Absolute positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if XRP position performs unexpectedly, Global Absolute 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 Global Absolute will offset losses from the drop in Global Absolute's long position.The idea behind XRP and Global Absolute Return 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.| Global Absolute vs. Gabelli Global Financial | Global Absolute vs. Vanguard Financials Index | Global Absolute vs. Mesirow Financial Small | Global Absolute vs. Blackrock Financial Institutions |
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 CEOs Directory module to screen CEOs from public companies around the world.
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