Correlation Between XRP and Franklin Growth

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

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

Diversification Opportunities for XRP and Franklin Growth

0.09

Correlation Coefficient

XRP  Franklin Growth

Significant diversification

The 3 months correlation between XRP and Franklin is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding XRP and Franklin Growth Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin Growth 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 Franklin Growth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Franklin Growth has no effect on the direction of XRP i.e., XRP and Franklin Growth go up and down completely randomly.

Pair Corralation between XRP and Franklin Growth

Assuming the 90 days trading horizon XRP is expected to generate 5.15 times more return on investment than Franklin Growth. However, XRP is 5.15 times more volatile than Franklin Growth Fund. It trades about 0.05 of its potential returns per unit of risk. Franklin Growth Fund is currently generating about -0.09 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	Insignificant
Accuracy	93.65%
Values	Daily Returns

XRP  vs.  Franklin Growth 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.

Franklin Growth

Risk-Adjusted Performance

Very Weak

Over the last 90 days Franklin Growth Fund has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Franklin Growth 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 Franklin Growth

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

The idea behind XRP and Franklin Growth 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.