Correlation Between XRP and Short Term
Can any of the company-specific risk be diversified away by investing in both XRP and Short Term 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 Short Term into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between XRP and Short Term Government Fund, you can compare the effects of market volatilities on XRP and Short Term 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 Short Term. Check out your portfolio center. Please also check ongoing floating volatility patterns of XRP and Short Term.
Diversification Opportunities for XRP and Short Term
0.25 | Correlation Coefficient |
Modest diversification
The 3 months correlation between XRP and Short is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding XRP and Short Term Government Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Short Term Government 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 Short Term. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Short Term Government has no effect on the direction of XRP i.e., XRP and Short Term go up and down completely randomly.
Pair Corralation between XRP and Short Term
Assuming the 90 days trading horizon XRP is expected to generate 64.53 times more return on investment than Short Term. However, XRP is 64.53 times more volatile than Short Term Government Fund. It trades about 0.31 of its potential returns per unit of risk. Short Term Government Fund is currently generating about -0.04 per unit of risk. If you would invest 54.00 in XRP on October 31, 2024 and sell it today you would earn a total of 253.00 from holding XRP or generate 468.52% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.35% |
| Values | Daily Returns |
XRP vs. Short Term Government Fund
Performance |
| Timeline |
| XRP |
| Short Term Government |
XRP and Short Term Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with XRP and Short Term
The main advantage of trading using opposite XRP and Short Term positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if XRP position performs unexpectedly, Short Term 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 Short Term will offset losses from the drop in Short Term's long position.The idea behind XRP and Short Term Government Fund 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.| Short Term vs. Morningstar Defensive Bond | Short Term vs. Ab Bond Inflation | Short Term vs. Dreyfusstandish Global Fixed | Short Term vs. Artisan High Income |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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