Correlation Between XRP and Baron Asset

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

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

Diversification Opportunities for XRP and Baron Asset

-0.26

Correlation Coefficient

XRP  Baron Asset

Very good diversification

The 3 months correlation between XRP and Baron is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding XRP and Baron Asset Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Baron Asset Fund 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 Baron Asset. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Baron Asset Fund has no effect on the direction of XRP i.e., XRP and Baron Asset go up and down completely randomly.

Pair Corralation between XRP and Baron Asset

Assuming the 90 days trading horizon XRP is expected to generate 5.87 times more return on investment than Baron Asset. However, XRP is 5.87 times more volatile than Baron Asset Fund. It trades about 0.12 of its potential returns per unit of risk. Baron Asset Fund is currently generating about 0.02 per unit of risk. If you would invest  35.00  in XRP on October 9, 2024 and sell it today you would earn a total of  207.00  from holding XRP or generate 591.43% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	61.76%
Values	Daily Returns

XRP  vs.  Baron Asset Fund

XRP

Risk-Adjusted Performance

27 of 100

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in XRP are ranked lower than 27 (%) 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.

Baron Asset Fund

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Baron Asset Fund has generated negative risk-adjusted returns adding no value to fund investors. In spite of weak performance in the last few months, the Fund's basic indicators remain fairly strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

Pair Trading with XRP and Baron Asset

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

The idea behind XRP and Baron Asset Fund 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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.