Correlation Between Axie Infinity and XRP

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Can any of the company-specific risk be diversified away by investing in both Axie Infinity and XRP 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 Axie Infinity and XRP into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Axie Infinity Shards and XRP, you can compare the effects of market volatilities on Axie Infinity and XRP 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 Axie Infinity with a short position of XRP. Check out your portfolio center. Please also check ongoing floating volatility patterns of Axie Infinity and XRP.

Diversification Opportunities for Axie Infinity and XRP

0.12
  Correlation Coefficient

Average diversification

The 3 months correlation between Axie Infinity and XRP is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding Axie Infinity Shards and XRP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on XRP and Axie Infinity 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 Axie Infinity Shards are associated (or correlated) with XRP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of XRP has no effect on the direction of Axie Infinity i.e., Axie Infinity and XRP go up and down completely randomly.

Pair Corralation between Axie Infinity and XRP

Assuming the 90 days trading horizon Axie Infinity Shards is expected to under-perform the XRP. In addition to that, Axie Infinity is 1.35 times more volatile than XRP. It trades about -0.09 of its total potential returns per unit of risk. XRP is currently generating about -0.11 per unit of volatility. If you would invest  51.00  in XRP on September 4, 2022 and sell it today you would lose (11.00)  from holding XRP or give up 21.57% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Axie Infinity Shards  vs.  XRP

 Performance (%) 
       Timeline  
Axie Infinity Shards 
Axie Infinity Performance
0 of 100
Over the last 90 days Axie Infinity Shards has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Crypto's basic indicators remain somewhat strong which may send shares a bit higher in January 2023. The current disturbance may also be a sign of long term up-swing for Axie Infinity Shards investors.

Axie Infinity Price Channel

XRP 
XRP Performance
6 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in XRP are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, XRP sustained solid returns over the last few months and may actually be approaching a breakup point.

XRP Price Channel

Axie Infinity and XRP Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Axie Infinity and XRP

The main advantage of trading using opposite Axie Infinity and XRP positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Axie Infinity position performs unexpectedly, XRP 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 XRP will offset losses from the drop in XRP's long position.
Axie Infinity vs. XRP
Axie Infinity vs. Polygon
Axie Infinity vs. Chainlink
Axie Infinity vs. Solana
The idea behind Axie Infinity Shards and XRP 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.
XRP vs. Polygon
XRP vs. Chainlink
XRP vs. Solana
XRP vs. Polkadot
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.

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