Correlation Between XRP and Nordea 1

Can any of the company-specific risk be diversified away by investing in both XRP and Nordea 1 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 Nordea 1 into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between XRP and Nordea 1 , you can compare the effects of market volatilities on XRP and Nordea 1 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 Nordea 1. Check out your portfolio center. Please also check ongoing floating volatility patterns of XRP and Nordea 1.

Diversification Opportunities for XRP and Nordea 1

0.28

Correlation Coefficient

XRP  Nordea 1

Modest diversification

The 3 months correlation between XRP and Nordea is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding XRP and Nordea 1 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nordea 1 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 Nordea 1. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nordea 1 has no effect on the direction of XRP i.e., XRP and Nordea 1 go up and down completely randomly.

Pair Corralation between XRP and Nordea 1

Assuming the 90 days trading horizon XRP is expected to generate 5.97 times more return on investment than Nordea 1. However, XRP is 5.97 times more volatile than Nordea 1 . It trades about 0.04 of its potential returns per unit of risk. Nordea 1 is currently generating about -0.07 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  10.00  from holding XRP or generate 4.31% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	96.88%
Values	Daily Returns

XRP  vs.  Nordea 1

XRP

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in XRP are ranked lower than 3 (%) 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.

Nordea 1

Risk-Adjusted Performance

Very Weak

Over the last 90 days Nordea 1 has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Nordea 1 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 Nordea 1

The main advantage of trading using opposite XRP and Nordea 1 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if XRP position performs unexpectedly, Nordea 1 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 Nordea 1 will offset losses from the drop in Nordea 1's long position.

The idea behind XRP and Nordea 1 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.