Correlation Between XRP and Patterson Companies

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

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

Diversification Opportunities for XRP and Patterson Companies

0.5

Correlation Coefficient

XRP  Patterson Companies

Very weak diversification

The 3 months correlation between XRP and Patterson is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding XRP and Patterson Companies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Patterson Companies 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 Patterson Companies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Patterson Companies has no effect on the direction of XRP i.e., XRP and Patterson Companies go up and down completely randomly.

Pair Corralation between XRP and Patterson Companies

Assuming the 90 days trading horizon XRP is expected to generate 1.7 times more return on investment than Patterson Companies. However, XRP is 1.7 times more volatile than Patterson Companies. It trades about 0.4 of its potential returns per unit of risk. Patterson Companies is currently generating about 0.16 per unit of risk. If you would invest  50.00  in XRP on October 24, 2024 and sell it today you would earn a total of  267.00  from holding XRP or generate 534.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	93.75%
Values	Daily Returns

XRP  vs.  Patterson Companies

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.

Patterson Companies

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Patterson Companies are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, Patterson Companies unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with XRP and Patterson Companies

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

The idea behind XRP and Patterson Companies 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..