Correlation Between XRP and Fidelity Worldwide

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

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

Diversification Opportunities for XRP and Fidelity Worldwide

-0.34

Correlation Coefficient

XRP  Fidelity Worldwide

Very good diversification

The 3 months correlation between XRP and Fidelity is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding XRP and Fidelity Worldwide Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity Worldwide 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 Fidelity Worldwide. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fidelity Worldwide has no effect on the direction of XRP i.e., XRP and Fidelity Worldwide go up and down completely randomly.

Pair Corralation between XRP and Fidelity Worldwide

Assuming the 90 days trading horizon XRP is expected to generate 4.42 times more return on investment than Fidelity Worldwide. However, XRP is 4.42 times more volatile than Fidelity Worldwide Fund. It trades about 0.38 of its potential returns per unit of risk. Fidelity Worldwide Fund is currently generating about -0.05 per unit of risk. If you would invest  53.00  in XRP on October 26, 2024 and sell it today you would earn a total of  258.00  from holding XRP or generate 486.79% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.24%
Values	Daily Returns

XRP  vs.  Fidelity Worldwide Fund

XRP

Risk-Adjusted Performance

30 of 100

Very Strong

Compared to the overall equity markets, risk-adjusted returns on investments in XRP are ranked lower than 30 (%) 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.

Fidelity Worldwide

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Fidelity Worldwide Fund has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong technical and fundamental indicators, Fidelity Worldwide 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 Fidelity Worldwide

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

The idea behind XRP and Fidelity Worldwide 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.