Correlation Between XRP and ApeCoin

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

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

Diversification Opportunities for XRP and ApeCoin

0.47

Correlation Coefficient

XRP  ApeCoin

Very weak diversification

The 3 months correlation between XRP and ApeCoin is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding XRP and ApeCoin in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ApeCoin 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 ApeCoin. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ApeCoin has no effect on the direction of XRP i.e., XRP and ApeCoin go up and down completely randomly.

Pair Corralation between XRP and ApeCoin

Assuming the 90 days trading horizon XRP is expected to generate 0.88 times more return on investment than ApeCoin. However, XRP is 1.14 times less risky than ApeCoin. It trades about 0.03 of its potential returns per unit of risk. ApeCoin is currently generating about -0.2 per unit of risk. If you would invest  208.00  in XRP on December 29, 2024 and sell it today you would earn a total of  4.00  from holding XRP or generate 1.92% return on investment over 90 days.

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

XRP  vs.  ApeCoin

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.

ApeCoin

Risk-Adjusted Performance

Very Weak

Over the last 90 days ApeCoin has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Crypto's technical and fundamental 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 ApeCoin shareholders.

Pair Trading with XRP and ApeCoin

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

The idea behind XRP and ApeCoin 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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.