Correlation Between XRP and EXPAND

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

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

Diversification Opportunities for XRP and EXPAND

0.32

Correlation Coefficient

XRP  EXPAND

Weak diversification

The 3 months correlation between XRP and EXPAND is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding XRP and EXPAND in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EXPAND 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 EXPAND. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EXPAND has no effect on the direction of XRP i.e., XRP and EXPAND go up and down completely randomly.

Pair Corralation between XRP and EXPAND

Assuming the 90 days trading horizon XRP is expected to generate 0.39 times more return on investment than EXPAND. However, XRP is 2.56 times less risky than EXPAND. It trades about 0.05 of its potential returns per unit of risk. EXPAND is currently generating about -0.02 per unit of risk. If you would invest  218.00  in XRP on December 27, 2024 and sell it today you would earn a total of  16.00  from holding XRP or generate 7.34% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

XRP  vs.  EXPAND

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.

EXPAND

Risk-Adjusted Performance

Very Weak

Over the last 90 days EXPAND has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unsteady performance in the last few months, the Crypto's basic indicators remain somewhat strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for EXPAND investors.

Pair Trading with XRP and EXPAND

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

The idea behind XRP and EXPAND 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.