Correlation Between XRP and MTH

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

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

Diversification Opportunities for XRP and MTH

-0.42

Correlation Coefficient

XRP  MTH

Very good diversification

The 3 months correlation between XRP and MTH is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding XRP and MTH in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MTH 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 MTH. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MTH has no effect on the direction of XRP i.e., XRP and MTH go up and down completely randomly.

Pair Corralation between XRP and MTH

Assuming the 90 days trading horizon XRP is expected to generate 0.29 times more return on investment than MTH. However, XRP is 3.45 times less risky than MTH. It trades about -0.02 of its potential returns per unit of risk. MTH is currently generating about -0.04 per unit of risk. If you would invest  251.00  in XRP on December 1, 2024 and sell it today you would lose (37.00) from holding XRP or give up 14.74% of portfolio value over 90 days.

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

XRP  vs.  MTH

XRP

Risk-Adjusted Performance

Very Weak

Over the last 90 days XRP has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Crypto's basic indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for XRP shareholders.

MTH

Risk-Adjusted Performance

Very Weak

Over the last 90 days MTH has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Crypto's technical indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for MTH shareholders.

Pair Trading with XRP and MTH

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

The idea behind XRP and MTH 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 Stocks Directory module to find actively traded stocks across global markets.