Correlation Between XRP and Balancer

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

Diversification Opportunities for XRP and Balancer

0.95
  Correlation Coefficient

Almost no diversification

The 3 months correlation between XRP and Balancer is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding XRP and Balancer in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Balancer 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 Balancer. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Balancer has no effect on the direction of XRP i.e., XRP and Balancer go up and down completely randomly.

Pair Corralation between XRP and Balancer

Assuming the 90 days trading horizon XRP is expected to generate 0.77 times more return on investment than Balancer. However, XRP is 1.29 times less risky than Balancer. It trades about -0.07 of its potential returns per unit of risk. Balancer is currently generating about -0.06 per unit of risk. If you would invest  109.00  in XRP on May 12, 2022 and sell it today you would lose (72.00)  from holding XRP or give up 66.06% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Strong
Accuracy100.0%
ValuesDaily Returns

XRP  vs.  Balancer

 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

Balancer 
Balancer Performance
0 of 100
Over the last 90 days Balancer 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 basic indicators 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 Balancer investors.

Balancer Price Channel

XRP and Balancer Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with XRP and Balancer

The main advantage of trading using opposite XRP and Balancer positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if XRP position performs unexpectedly, Balancer 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 Balancer will offset losses from the drop in Balancer's long position.
The idea behind XRP and Balancer 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.

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