Correlation Between XRP and Smallcap Fund

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

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

Diversification Opportunities for XRP and Smallcap Fund

0.06

Correlation Coefficient

XRP  Smallcap Fund

Significant diversification

The 3 months correlation between XRP and Smallcap is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding XRP and Smallcap Fund Fka in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Smallcap Fund Fka 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 Smallcap Fund. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Smallcap Fund Fka has no effect on the direction of XRP i.e., XRP and Smallcap Fund go up and down completely randomly.

Pair Corralation between XRP and Smallcap Fund

Assuming the 90 days trading horizon XRP is expected to generate 6.07 times more return on investment than Smallcap Fund. However, XRP is 6.07 times more volatile than Smallcap Fund Fka. It trades about 0.29 of its potential returns per unit of risk. Smallcap Fund Fka is currently generating about 0.27 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	Insignificant
Accuracy	85.71%
Values	Daily Returns

XRP  vs.  Smallcap Fund Fka

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.

Smallcap Fund Fka

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Smallcap Fund Fka are ranked lower than 5 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong primary indicators, Smallcap Fund is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with XRP and Smallcap Fund

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

The idea behind XRP and Smallcap Fund Fka 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.