Correlation Between XRP and Franklin

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

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

Diversification Opportunities for XRP and Franklin

-0.11

Correlation Coefficient

XRP  Franklin

Good diversification

The 3 months correlation between XRP and Franklin is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding XRP and Franklin Government Securities in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin Government 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. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Franklin Government has no effect on the direction of XRP i.e., XRP and Franklin go up and down completely randomly.

Pair Corralation between XRP and Franklin

Assuming the 90 days trading horizon XRP is expected to generate 23.85 times more return on investment than Franklin. However, XRP is 23.85 times more volatile than Franklin Government Securities. It trades about 0.34 of its potential returns per unit of risk. Franklin Government Securities is currently generating about -0.12 per unit of risk. If you would invest  53.00  in XRP on October 9, 2024 and sell it today you would earn a total of  189.00  from holding XRP or generate 356.6% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	96.83%
Values	Daily Returns

XRP  vs.  Franklin Government Securities

XRP

Risk-Adjusted Performance

27 of 100

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in XRP are ranked lower than 27 (%) 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 Government

Risk-Adjusted Performance

0 of 100

Very Weak

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

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

The idea behind XRP and Franklin Government Securities 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.

Check out your portfolio center.

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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.