Correlation Between BEZ and XRP

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

Diversification Opportunities for BEZ and XRP

-0.11
  Correlation Coefficient

Good diversification

The 3 months correlation between BEZ and XRP is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding BEZ and XRP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on XRP and BEZ 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 BEZ 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 BEZ i.e., BEZ and XRP go up and down completely randomly.

Pair Corralation between BEZ and XRP

Assuming the 90 days trading horizon BEZ is expected to generate 26.33 times more return on investment than XRP. However, BEZ is 26.33 times more volatile than XRP. It trades about 0.15 of its potential returns per unit of risk. XRP is currently generating about -0.07 per unit of risk. If you would invest  0.29  in BEZ on September 8, 2022 and sell it today you would earn a total of  18.71  from holding BEZ or generate 6469.85% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

BEZ  vs.  XRP

 Performance (%) 
       Timeline  
BEZ 
BEZ Performance
9 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in BEZ are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak technical and fundamental indicators, BEZ sustained solid returns over the last few months and may actually be approaching a breakup point.

BEZ Price Channel

XRP 
XRP Performance
3 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in XRP are ranked lower than 3 (%) 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

BEZ and XRP Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with BEZ and XRP

The main advantage of trading using opposite BEZ and XRP positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BEZ 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.
BEZ vs. XRP
BEZ vs. Polygon
BEZ vs. Solana
BEZ vs. Chainlink
The idea behind BEZ 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. Solana
XRP vs. Chainlink
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.

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