Correlation Between XRP and BORA

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

Diversification Opportunities for XRP and BORA

0.73
  Correlation Coefficient

Poor diversification

The 3 months correlation between XRP and BORA is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding XRP and BORA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BORA 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 BORA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BORA has no effect on the direction of XRP i.e., XRP and BORA go up and down completely randomly.

Pair Corralation between XRP and BORA

Assuming the 90 days trading horizon XRP is expected to generate 1.43 times less return on investment than BORA. But when comparing it to its historical volatility, XRP is 1.25 times less risky than BORA. It trades about 0.14 of its potential returns per unit of risk. BORA is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest  27.00  in BORA on May 16, 2022 and sell it today you would earn a total of  9.00  from holding BORA or generate 33.33% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

XRP  vs.  BORA

 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

BORA 
BORA Performance
0 of 100
Over the last 90 days BORA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, BORA is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

BORA Price Channel

XRP and BORA Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with XRP and BORA

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

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