Correlation Between XRP and Spruce Biosciences

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

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

Diversification Opportunities for XRP and Spruce Biosciences

-0.14

Correlation Coefficient

XRP  Spruce Biosciences

Good diversification

The 3 months correlation between XRP and Spruce is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding XRP and Spruce Biosciences in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Spruce Biosciences 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 Spruce Biosciences. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Spruce Biosciences has no effect on the direction of XRP i.e., XRP and Spruce Biosciences go up and down completely randomly.

Pair Corralation between XRP and Spruce Biosciences

Assuming the 90 days trading horizon XRP is expected to generate 1.72 times more return on investment than Spruce Biosciences. However, XRP is 1.72 times more volatile than Spruce Biosciences. It trades about 0.03 of its potential returns per unit of risk. Spruce Biosciences is currently generating about -0.06 per unit of risk. If you would invest  228.00  in XRP on December 19, 2024 and sell it today you would earn a total of  1.00  from holding XRP or generate 0.44% return on investment over 90 days.

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

XRP  vs.  Spruce Biosciences

XRP

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in XRP are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, XRP may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Spruce Biosciences

Risk-Adjusted Performance

Very Weak

Over the last 90 days Spruce Biosciences has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with XRP and Spruce Biosciences

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

The idea behind XRP and Spruce Biosciences 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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.