Correlation Between XRP and Kaspa
Can any of the company-specific risk be diversified away by investing in both XRP and Kaspa 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 Kaspa into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between XRP and Kaspa, you can compare the effects of market volatilities on XRP and Kaspa 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 Kaspa. Check out your portfolio center. Please also check ongoing floating volatility patterns of XRP and Kaspa.
Diversification Opportunities for XRP and Kaspa
Average diversification
The 3 months correlation between XRP and Kaspa is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding XRP and Kaspa in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kaspa 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 Kaspa. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kaspa has no effect on the direction of XRP i.e., XRP and Kaspa go up and down completely randomly.
Pair Corralation between XRP and Kaspa
Assuming the 90 days trading horizon XRP is expected to generate 0.65 times more return on investment than Kaspa. However, XRP is 1.54 times less risky than Kaspa. It trades about 0.16 of its potential returns per unit of risk. Kaspa is currently generating about 0.05 per unit of risk. If you would invest 54.00 in XRP on August 26, 2024 and sell it today you would earn a total of 93.00 from holding XRP or generate 172.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
XRP vs. Kaspa
Performance |
| Timeline |
| XRP |
| Kaspa |
XRP and Kaspa Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with XRP and Kaspa
The main advantage of trading using opposite XRP and Kaspa positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if XRP position performs unexpectedly, Kaspa 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 Kaspa will offset losses from the drop in Kaspa's long position.The idea behind XRP and Kaspa 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
Other Complementary Tools
| Idea Optimizer Use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio | |
| Crypto Correlations Use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins | |
| Price Transformation Use Price Transformation models to analyze the depth of different equity instruments across global markets | |
| Portfolio Comparator Compare the composition, asset allocations and performance of any two portfolios in your account | |
| Positions Ratings Determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance |