Correlation Between XRP and ANZ SP

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

By analyzing existing cross correlation between XRP and ANZ SP 500, you can compare the effects of market volatilities on XRP and ANZ SP 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 ANZ SP. Check out your portfolio center. Please also check ongoing floating volatility patterns of XRP and ANZ SP.

Diversification Opportunities for XRP and ANZ SP

0.58

Correlation Coefficient

XRP  ANZ SP

Very weak diversification

The 3 months correlation between XRP and ANZ is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding XRP and ANZ SP 500 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ANZ SP 500 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 ANZ SP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ANZ SP 500 has no effect on the direction of XRP i.e., XRP and ANZ SP go up and down completely randomly.

Pair Corralation between XRP and ANZ SP

Assuming the 90 days trading horizon XRP is expected to generate 10.02 times more return on investment than ANZ SP. However, XRP is 10.02 times more volatile than ANZ SP 500. It trades about 0.38 of its potential returns per unit of risk. ANZ SP 500 is currently generating about 0.04 per unit of risk. If you would invest  53.00  in XRP on October 26, 2024 and sell it today you would earn a total of  258.00  from holding XRP or generate 486.79% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.41%
Values	Daily Returns

XRP  vs.  ANZ SP 500

XRP

Risk-Adjusted Performance

30 of 100

Very Strong

Compared to the overall equity markets, risk-adjusted returns on investments in XRP are ranked lower than 30 (%) 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.

ANZ SP 500

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in ANZ SP 500 are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, ANZ SP is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with XRP and ANZ SP

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

The idea behind XRP and ANZ SP 500 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.