Correlation Between XRP and Leverage Shares

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

By analyzing existing cross correlation between XRP and Leverage Shares 3x, you can compare the effects of market volatilities on XRP and Leverage Shares 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 Leverage Shares. Check out your portfolio center. Please also check ongoing floating volatility patterns of XRP and Leverage Shares.

Diversification Opportunities for XRP and Leverage Shares

0.59

Correlation Coefficient

XRP  Leverage Shares

Very weak diversification

The 3 months correlation between XRP and Leverage is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding XRP and Leverage Shares 3x in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Leverage Shares 3x 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 Leverage Shares. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Leverage Shares 3x has no effect on the direction of XRP i.e., XRP and Leverage Shares go up and down completely randomly.

Pair Corralation between XRP and Leverage Shares

Assuming the 90 days trading horizon XRP is expected to generate 0.57 times more return on investment than Leverage Shares. However, XRP is 1.75 times less risky than Leverage Shares. It trades about 0.29 of its potential returns per unit of risk. Leverage Shares 3x is currently generating about -0.04 per unit of risk. If you would invest  230.00  in XRP on October 25, 2024 and sell it today you would earn a total of  87.00  from holding XRP or generate 37.83% return on investment over 90 days.

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

XRP  vs.  Leverage Shares 3x

XRP

Risk-Adjusted Performance

31 of 100

Very Strong

Compared to the overall equity markets, risk-adjusted returns on investments in XRP are ranked lower than 31 (%) 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.

Leverage Shares 3x

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Leverage Shares 3x are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Leverage Shares unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with XRP and Leverage Shares

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

The idea behind XRP and Leverage Shares 3x 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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.