Correlation Between XRP and Invesco BulletShares

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

By analyzing existing cross correlation between XRP and Invesco BulletShares 2028, you can compare the effects of market volatilities on XRP and Invesco BulletShares 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 Invesco BulletShares. Check out your portfolio center. Please also check ongoing floating volatility patterns of XRP and Invesco BulletShares.

Diversification Opportunities for XRP and Invesco BulletShares

0.71

Correlation Coefficient

XRP  Invesco BulletShares

Poor diversification

The 3 months correlation between XRP and Invesco is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding XRP and Invesco BulletShares 2028 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Invesco BulletShares 2028 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 Invesco BulletShares. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Invesco BulletShares 2028 has no effect on the direction of XRP i.e., XRP and Invesco BulletShares go up and down completely randomly.

Pair Corralation between XRP and Invesco BulletShares

Assuming the 90 days trading horizon XRP is expected to generate 22.22 times more return on investment than Invesco BulletShares. However, XRP is 22.22 times more volatile than Invesco BulletShares 2028. It trades about 0.38 of its potential returns per unit of risk. Invesco BulletShares 2028 is currently generating about 0.08 per unit of risk. If you would invest  53.00  in XRP on October 26, 2024 and sell it today you would earn a total of  258.00  from holding XRP or generate 486.79% return on investment over 90 days.

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

XRP  vs.  Invesco BulletShares 2028

XRP

Risk-Adjusted Performance

30 of 100

Very Strong

Compared to the overall equity markets, risk-adjusted returns on investments in XRP are ranked lower than 30 (%) 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.

Invesco BulletShares 2028

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Invesco BulletShares 2028 are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable forward-looking indicators, Invesco BulletShares is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with XRP and Invesco BulletShares

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

The idea behind XRP and Invesco BulletShares 2028 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.