Correlation Between XRP and NuShares ETF

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

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

Diversification Opportunities for XRP and NuShares ETF

-0.58

Correlation Coefficient

XRP  NuShares ETF

Excellent diversification

The 3 months correlation between XRP and NuShares is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding XRP and NuShares ETF Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NuShares ETF Trust 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 NuShares ETF. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NuShares ETF Trust has no effect on the direction of XRP i.e., XRP and NuShares ETF go up and down completely randomly.

Pair Corralation between XRP and NuShares ETF

Assuming the 90 days trading horizon XRP is expected to generate 7.5 times more return on investment than NuShares ETF. However, XRP is 7.5 times more volatile than NuShares ETF Trust. It trades about 0.0 of its potential returns per unit of risk. NuShares ETF Trust is currently generating about -0.29 per unit of risk. If you would invest  234.00  in XRP on October 12, 2024 and sell it today you would lose (7.00) from holding XRP or give up 2.99% of portfolio value over 90 days.

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

XRP  vs.  NuShares ETF Trust

XRP

Risk-Adjusted Performance

25 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in XRP are ranked lower than 25 (%) 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.

NuShares ETF Trust

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days NuShares ETF Trust has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Etf's fundamental indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the ETF investors.

Pair Trading with XRP and NuShares ETF

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

The idea behind XRP and NuShares ETF Trust 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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.