Correlation Between XRP and OOKI
Can any of the company-specific risk be diversified away by investing in both XRP and OOKI 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 OOKI into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between XRP and OOKI, you can compare the effects of market volatilities on XRP and OOKI 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 OOKI. Check out your portfolio center. Please also check ongoing floating volatility patterns of XRP and OOKI.
Diversification Opportunities for XRP and OOKI
Very good diversification
The 3 months correlation between XRP and OOKI is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding XRP and OOKI in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on OOKI 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 OOKI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of OOKI has no effect on the direction of XRP i.e., XRP and OOKI go up and down completely randomly.
Pair Corralation between XRP and OOKI
Assuming the 90 days trading horizon XRP is expected to generate 7.4 times less return on investment than OOKI. But when comparing it to its historical volatility, XRP is 23.52 times less risky than OOKI. It trades about 0.58 of its potential returns per unit of risk. OOKI is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest 0.05 in OOKI on August 30, 2024 and sell it today you would earn a total of 0.16 from holding OOKI or generate 313.77% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
XRP vs. OOKI
Performance |
| Timeline |
| XRP |
| OOKI |
XRP and OOKI Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with XRP and OOKI
The main advantage of trading using opposite XRP and OOKI positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if XRP position performs unexpectedly, OOKI 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 OOKI will offset losses from the drop in OOKI's long position.The idea behind XRP and OOKI 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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