Correlation Between XRP and CDSPI Canadian

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

By analyzing existing cross correlation between XRP and CDSPI Canadian Equity, you can compare the effects of market volatilities on XRP and CDSPI Canadian 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 CDSPI Canadian. Check out your portfolio center. Please also check ongoing floating volatility patterns of XRP and CDSPI Canadian.

Diversification Opportunities for XRP and CDSPI Canadian

0.51

Correlation Coefficient

XRP  CDSPI Canadian

Very weak diversification

The 3 months correlation between XRP and CDSPI is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding XRP and CDSPI Canadian Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CDSPI Canadian Equity 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 CDSPI Canadian. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CDSPI Canadian Equity has no effect on the direction of XRP i.e., XRP and CDSPI Canadian go up and down completely randomly.

Pair Corralation between XRP and CDSPI Canadian

Assuming the 90 days trading horizon XRP is expected to generate 6.92 times more return on investment than CDSPI Canadian. However, XRP is 6.92 times more volatile than CDSPI Canadian Equity. It trades about 0.03 of its potential returns per unit of risk. CDSPI Canadian Equity is currently generating about -0.05 per unit of risk. If you would invest  232.00  in XRP on December 22, 2024 and sell it today you would earn a total of  6.00  from holding XRP or generate 2.59% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	92.31%
Values	Daily Returns

XRP  vs.  CDSPI Canadian Equity

XRP

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in XRP are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, XRP may actually be approaching a critical reversion point that can send shares even higher in April 2025.

CDSPI Canadian Equity

Risk-Adjusted Performance

Very Weak

Over the last 90 days CDSPI Canadian Equity has generated negative risk-adjusted returns adding no value to fund investors. Despite somewhat strong basic indicators, CDSPI Canadian is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with XRP and CDSPI Canadian

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

The idea behind XRP and CDSPI Canadian Equity 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.