Correlation Between XRP and IShares MSCI

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

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

Diversification Opportunities for XRP and IShares MSCI

0.09

Correlation Coefficient

XRP  IShares MSCI

Significant diversification

The 3 months correlation between XRP and IShares is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding XRP and iShares MSCI Brazil in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares MSCI Brazil 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 IShares MSCI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares MSCI Brazil has no effect on the direction of XRP i.e., XRP and IShares MSCI go up and down completely randomly.

Pair Corralation between XRP and IShares MSCI

Assuming the 90 days trading horizon XRP is expected to generate 1.02 times less return on investment than IShares MSCI. In addition to that, XRP is 3.92 times more volatile than iShares MSCI Brazil. It trades about 0.05 of its total potential returns per unit of risk. iShares MSCI Brazil is currently generating about 0.21 per unit of volatility. If you would invest  2,997  in iShares MSCI Brazil on December 21, 2024 and sell it today you would earn a total of  536.00  from holding iShares MSCI Brazil or generate 17.88% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	92.06%
Values	Daily Returns

XRP  vs.  iShares MSCI Brazil

XRP

Risk-Adjusted Performance

Insignificant

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.

iShares MSCI Brazil

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in iShares MSCI Brazil are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, IShares MSCI showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with XRP and IShares MSCI

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

The idea behind XRP and iShares MSCI Brazil 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.