Correlation Between XRP and AllianceBlock

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

Diversification Opportunities for XRP and AllianceBlock

0.76
  Correlation Coefficient

Poor diversification

The 3 months correlation between XRP and AllianceBlock is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding XRP and AllianceBlock in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AllianceBlock 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 AllianceBlock. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AllianceBlock has no effect on the direction of XRP i.e., XRP and AllianceBlock go up and down completely randomly.

Pair Corralation between XRP and AllianceBlock

Assuming the 90 days trading horizon XRP is expected to generate 0.63 times more return on investment than AllianceBlock. However, XRP is 1.6 times less risky than AllianceBlock. It trades about 0.11 of its potential returns per unit of risk. AllianceBlock is currently generating about 0.06 per unit of risk. If you would invest  32.00  in XRP on May 14, 2022 and sell it today you would earn a total of  6.00  from holding XRP or generate 18.75% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy95.56%
ValuesDaily Returns

XRP  vs.  AllianceBlock

 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

AllianceBlock 
AllianceBlock Performance
0 of 100
Over the last 90 days AllianceBlock 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 fundamental drivers remain somewhat strong which may send shares a bit higher in September 2022. The current disturbance may also be a sign of long term up-swing for AllianceBlock investors.

AllianceBlock Price Channel

XRP and AllianceBlock Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with XRP and AllianceBlock

The main advantage of trading using opposite XRP and AllianceBlock positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if XRP position performs unexpectedly, AllianceBlock 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 AllianceBlock will offset losses from the drop in AllianceBlock's long position.
The idea behind XRP and AllianceBlock 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.

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