Correlation Between XRP and Badger DAO

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

Diversification Opportunities for XRP and Badger DAO

0.79
  Correlation Coefficient

Poor diversification

The 3 months correlation between XRP and Badger is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding XRP and Badger DAO in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Badger DAO 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 Badger DAO. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Badger DAO has no effect on the direction of XRP i.e., XRP and Badger DAO go up and down completely randomly.

Pair Corralation between XRP and Badger DAO

Assuming the 90 days trading horizon XRP is expected to under-perform the Badger DAO. But the crypto coin apears to be less risky and, when comparing its historical volatility, XRP is 1.45 times less risky than Badger DAO. The crypto coin trades about -0.12 of its potential returns per unit of risk. The Badger DAO is currently generating about -0.06 of returns per unit of risk over similar time horizon. If you would invest  904.00  in Badger DAO on May 10, 2022 and sell it today you would lose (416.00)  from holding Badger DAO or give up 46.02% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

XRP  vs.  Badger DAO

 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 somewhat strong basic indicators, XRP is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

XRP Price Channel

Badger DAO 
Badger Performance
2 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Badger DAO are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak technical and fundamental indicators, Badger DAO sustained solid returns over the last few months and may actually be approaching a breakup point.

Badger Price Channel

XRP and Badger DAO Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with XRP and Badger DAO

The main advantage of trading using opposite XRP and Badger DAO positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if XRP position performs unexpectedly, Badger DAO 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 Badger DAO will offset losses from the drop in Badger DAO's long position.
The idea behind XRP and Badger DAO 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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.

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