Correlation Between Convex Finance and XRP

Can any of the company-specific risk be diversified away by investing in both Convex Finance and XRP 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 Convex Finance and XRP into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Convex Finance and XRP, you can compare the effects of market volatilities on Convex Finance and XRP 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 Convex Finance with a short position of XRP. Check out your portfolio center. Please also check ongoing floating volatility patterns of Convex Finance and XRP.

Diversification Opportunities for Convex Finance and XRP

-0.11

Correlation Coefficient

Convex Finance  XRP

Good diversification

The 3 months correlation between Convex and XRP is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding Convex Finance and XRP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on XRP and Convex Finance 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 Convex Finance are associated (or correlated) with XRP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of XRP has no effect on the direction of Convex Finance i.e., Convex Finance and XRP go up and down completely randomly.

Pair Corralation between Convex Finance and XRP

Assuming the 90 days trading horizon Convex Finance is expected to under-perform the XRP. In addition to that, Convex Finance is 1.86 times more volatile than XRP. It trades about -0.1 of its total potential returns per unit of risk. XRP is currently generating about -0.02 per unit of volatility. If you would invest  251.00  in XRP on December 1, 2024 and sell it today you would lose (37.00) from holding XRP or give up 14.74% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Convex Finance  vs.  XRP

Convex Finance

Risk-Adjusted Performance

Very Weak

Over the last 90 days Convex Finance has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Crypto's basic indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for Convex Finance shareholders.

XRP

Risk-Adjusted Performance

Very Weak

Over the last 90 days XRP has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Crypto's basic indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for XRP shareholders.

Pair Trading with Convex Finance and XRP

The main advantage of trading using opposite Convex Finance and XRP positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Convex Finance position performs unexpectedly, XRP 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 XRP will offset losses from the drop in XRP's long position.

The idea behind Convex Finance and XRP 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.

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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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..