Correlation Between PRO and XRP

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

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

Diversification Opportunities for PRO and XRP

0.24

Correlation Coefficient

PRO  XRP

Modest diversification

The 3 months correlation between PRO and XRP is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding PRO and XRP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on XRP and PRO 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 PRO 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 PRO i.e., PRO and XRP go up and down completely randomly.

Pair Corralation between PRO and XRP

Assuming the 90 days trading horizon PRO is expected to under-perform the XRP. But the crypto coin apears to be less risky and, when comparing its historical volatility, PRO is 1.06 times less risky than XRP. The crypto coin trades about -0.12 of its potential returns per unit of risk. The XRP is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  215.00  in XRP on December 25, 2024 and sell it today you would earn a total of  22.00  from holding XRP or generate 10.23% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

PRO  vs.  XRP

PRO

Risk-Adjusted Performance

Very Weak

Over the last 90 days PRO 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 PRO shareholders.

XRP

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in XRP are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, XRP exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with PRO and XRP

The main advantage of trading using opposite PRO and XRP positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PRO 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 PRO 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.

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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.