Correlation Between XRP and Whiting Petroleum

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

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

Diversification Opportunities for XRP and Whiting Petroleum

-0.72

Correlation Coefficient

XRP  Whiting Petroleum

Pay attention - limited upside

The 3 months correlation between XRP and Whiting is -0.72. Overlapping area represents the amount of risk that can be diversified away by holding XRP and Whiting Petroleum in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Whiting Petroleum 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 Whiting Petroleum. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Whiting Petroleum has no effect on the direction of XRP i.e., XRP and Whiting Petroleum go up and down completely randomly.

Pair Corralation between XRP and Whiting Petroleum

Assuming the 90 days trading horizon XRP is expected to generate 1.42 times more return on investment than Whiting Petroleum. However, XRP is 1.42 times more volatile than Whiting Petroleum. It trades about 0.12 of its potential returns per unit of risk. Whiting Petroleum is currently generating about 0.03 per unit of risk. If you would invest  40.00  in XRP on October 11, 2024 and sell it today you would earn a total of  198.00  from holding XRP or generate 495.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	73.15%
Values	Daily Returns

XRP  vs.  Whiting Petroleum

XRP

Risk-Adjusted Performance

26 of 100

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in XRP are ranked lower than 26 (%) 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.

Whiting Petroleum

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Whiting Petroleum has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Whiting Petroleum is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with XRP and Whiting Petroleum

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

The idea behind XRP and Whiting Petroleum 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.

Check out your portfolio center.

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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.