Correlation Between SCRT and XRP

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

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

Diversification Opportunities for SCRT and XRP

0.84

Correlation Coefficient

SCRT  XRP

Very poor diversification

The 3 months correlation between SCRT and XRP is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding SCRT and XRP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on XRP and SCRT 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 SCRT 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 SCRT i.e., SCRT and XRP go up and down completely randomly.

Pair Corralation between SCRT and XRP

Assuming the 90 days trading horizon SCRT is expected to generate 27.41 times less return on investment than XRP. In addition to that, SCRT is 1.0 times more volatile than XRP. It trades about 0.0 of its total potential returns per unit of risk. XRP is currently generating about 0.11 per unit of volatility. If you would invest  41.00  in XRP on October 10, 2024 and sell it today you would earn a total of  197.00  from holding XRP or generate 480.49% return on investment over 90 days.

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

SCRT  vs.  XRP

SCRT

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in SCRT are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady fundamental indicators, SCRT exhibited solid returns over the last few months and may actually be approaching a breakup point.

XRP

Risk-Adjusted Performance

26 of 100

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in XRP are ranked lower than 26 (%) 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 SCRT and XRP

The main advantage of trading using opposite SCRT and XRP positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SCRT 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 SCRT 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..