Correlation Between XRP and Bounce

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

Diversification Opportunities for XRP and Bounce

-0.13
  Correlation Coefficient

Good diversification

The 3 months correlation between XRP and Bounce is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding XRP and Bounce in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bounce 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 Bounce. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bounce has no effect on the direction of XRP i.e., XRP and Bounce go up and down completely randomly.

Pair Corralation between XRP and Bounce

Assuming the 90 days trading horizon XRP is expected to generate 0.66 times more return on investment than Bounce. However, XRP is 1.51 times less risky than Bounce. It trades about -0.03 of its potential returns per unit of risk. Bounce is currently generating about -0.05 per unit of risk. If you would invest  92.00  in XRP on August 29, 2022 and sell it today you would lose (52.00)  from holding XRP or give up 56.52% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

XRP  vs.  Bounce

 Performance (%) 
       Timeline  
XRP 
XRP Performance
5 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in XRP are ranked lower than 5 (%) 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

Bounce 
Bounce Performance
0 of 100
Over the last 90 days Bounce 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 forward indicators remain quite persistent which may send shares a bit higher in December 2022. The latest mess may also be a sign of long-standing up-swing for Bounce institutional investors.

Bounce Price Channel

XRP and Bounce Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with XRP and Bounce

The main advantage of trading using opposite XRP and Bounce positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if XRP position performs unexpectedly, Bounce 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 Bounce will offset losses from the drop in Bounce's long position.
XRP vs. Solana
XRP vs. Polygon
XRP vs. Chainlink
XRP vs. Polkadot
The idea behind XRP and Bounce 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.
Bounce vs. XRP
Bounce vs. Solana
Bounce vs. Polygon
Bounce vs. Chainlink
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.

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