Correlation Between XRP and Adshares

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

Diversification Opportunities for XRP and Adshares

0.67
  Correlation Coefficient

Poor diversification

The 3 months correlation between XRP and Adshares is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding XRP and Adshares in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Adshares 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 Adshares. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Adshares has no effect on the direction of XRP i.e., XRP and Adshares go up and down completely randomly.

Pair Corralation between XRP and Adshares

Assuming the 90 days trading horizon XRP is expected to generate 4.45 times less return on investment than Adshares. But when comparing it to its historical volatility, XRP is 1.13 times less risky than Adshares. It trades about 0.08 of its potential returns per unit of risk. Adshares is currently generating about 0.32 of returns per unit of risk over similar time horizon. If you would invest  197.00  in Adshares on May 15, 2022 and sell it today you would earn a total of  166.00  from holding Adshares or generate 84.26% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

XRP  vs.  Adshares

 Performance (%) 
       Timeline  
XRP 
XRP Performance
0 of 100
Over the last 90 days XRP has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Crypto's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for XRP investors.

XRP Price Channel

Adshares 
Adshares Performance
5 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Adshares are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak fundamental indicators, Adshares sustained solid returns over the last few months and may actually be approaching a breakup point.

Adshares Price Channel

XRP and Adshares Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with XRP and Adshares

The main advantage of trading using opposite XRP and Adshares positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if XRP position performs unexpectedly, Adshares 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 Adshares will offset losses from the drop in Adshares' long position.
The idea behind XRP and Adshares 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.

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