Correlation Between XRP and IShares Global

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

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

Diversification Opportunities for XRP and IShares Global

-0.75

Correlation Coefficient

XRP  IShares Global

Pay attention - limited upside

The 3 months correlation between XRP and IShares is -0.75. Overlapping area represents the amount of risk that can be diversified away by holding XRP and iShares Global Clean in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Global Clean 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 IShares Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Global Clean has no effect on the direction of XRP i.e., XRP and IShares Global go up and down completely randomly.

Pair Corralation between XRP and IShares Global

Assuming the 90 days trading horizon XRP is expected to generate 4.58 times more return on investment than IShares Global. However, XRP is 4.58 times more volatile than iShares Global Clean. It trades about 0.18 of its potential returns per unit of risk. iShares Global Clean is currently generating about -0.04 per unit of risk. If you would invest  54.00  in XRP on October 9, 2024 and sell it today you would earn a total of  176.00  from holding XRP or generate 325.93% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	66.27%
Values	Daily Returns

XRP  vs.  iShares Global Clean

XRP

Risk-Adjusted Performance

26 of 100

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in XRP are ranked lower than 26 (%) 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.

iShares Global Clean

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days iShares Global Clean has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unsteady performance, the Etf's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the Exchange Traded Fund stockholders.

Pair Trading with XRP and IShares Global

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

The idea behind XRP and iShares Global Clean 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.