Correlation Between XRP and Canadian Imperial

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

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

Diversification Opportunities for XRP and Canadian Imperial

0.48

Correlation Coefficient

XRP  Canadian Imperial

Very weak diversification

The 3 months correlation between XRP and Canadian is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding XRP and Canadian Imperial Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Canadian Imperial Bank 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 Canadian Imperial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Canadian Imperial Bank has no effect on the direction of XRP i.e., XRP and Canadian Imperial go up and down completely randomly.

Pair Corralation between XRP and Canadian Imperial

Assuming the 90 days trading horizon XRP is expected to generate 4.61 times more return on investment than Canadian Imperial. However, XRP is 4.61 times more volatile than Canadian Imperial Bank. It trades about 0.04 of its potential returns per unit of risk. Canadian Imperial Bank is currently generating about -0.2 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  10.00  from holding XRP or generate 4.31% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	93.75%
Values	Daily Returns

XRP  vs.  Canadian Imperial Bank

XRP

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in XRP are ranked lower than 3 (%) 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.

Canadian Imperial Bank

Risk-Adjusted Performance

Very Weak

Over the last 90 days Canadian Imperial Bank has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with XRP and Canadian Imperial

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

The idea behind XRP and Canadian Imperial Bank 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.