Correlation Between XRP and Ambassador Fund

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

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

Diversification Opportunities for XRP and Ambassador Fund

-0.3

Correlation Coefficient

XRP  Ambassador Fund

Very good diversification

The 3 months correlation between XRP and Ambassador is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding XRP and Ambassador Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ambassador 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 Ambassador Fund. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ambassador Fund has no effect on the direction of XRP i.e., XRP and Ambassador Fund go up and down completely randomly.

Pair Corralation between XRP and Ambassador Fund

Assuming the 90 days trading horizon XRP is expected to generate 83.1 times more return on investment than Ambassador Fund. However, XRP is 83.1 times more volatile than Ambassador Fund. It trades about 0.05 of its potential returns per unit of risk. Ambassador Fund is currently generating about 0.39 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 Against
Strength	Insignificant
Accuracy	93.65%
Values	Daily Returns

XRP  vs.  Ambassador Fund

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.

Ambassador Fund

Risk-Adjusted Performance

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Ambassador Fund are ranked lower than 30 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong forward indicators, Ambassador Fund is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with XRP and Ambassador Fund

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

The idea behind XRP and Ambassador 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.