Correlation Between XRP and Blackrock Smid-cap

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

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

Diversification Opportunities for XRP and Blackrock Smid-cap

0.41

Correlation Coefficient

XRP  Blackrock Smid-cap

Very weak diversification

The 3 months correlation between XRP and Blackrock is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding XRP and Blackrock Smid Cap Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Blackrock Smid Cap 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 Blackrock Smid-cap. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Blackrock Smid Cap has no effect on the direction of XRP i.e., XRP and Blackrock Smid-cap go up and down completely randomly.

Pair Corralation between XRP and Blackrock Smid-cap

Assuming the 90 days trading horizon XRP is expected to generate 3.23 times more return on investment than Blackrock Smid-cap. However, XRP is 3.23 times more volatile than Blackrock Smid Cap Growth. It trades about 0.05 of its potential returns per unit of risk. Blackrock Smid Cap Growth is currently generating about -0.11 per unit of risk. If you would invest  232.00  in XRP on December 21, 2024 and sell it today you would earn a total of  22.00  from holding XRP or generate 9.48% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	93.65%
Values	Daily Returns

XRP  vs.  Blackrock Smid Cap Growth

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.

Blackrock Smid Cap

Risk-Adjusted Performance

Very Weak

Over the last 90 days Blackrock Smid Cap Growth has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's forward-looking signals remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Pair Trading with XRP and Blackrock Smid-cap

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

The idea behind XRP and Blackrock Smid Cap Growth 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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.