Correlation Between XRP and Braintrust

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

Diversification Opportunities for XRP and Braintrust

0.75
  Correlation Coefficient

Poor diversification

The 3 months correlation between XRP and Braintrust is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding XRP and Braintrust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Braintrust 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 Braintrust. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Braintrust has no effect on the direction of XRP i.e., XRP and Braintrust go up and down completely randomly.

Pair Corralation between XRP and Braintrust

Assuming the 90 days trading horizon XRP is expected to generate 0.57 times more return on investment than Braintrust. However, XRP is 1.76 times less risky than Braintrust. It trades about 0.06 of its potential returns per unit of risk. Braintrust is currently generating about -0.03 per unit of risk. If you would invest  37.00  in XRP on May 18, 2022 and sell it today you would earn a total of  1.00  from holding XRP or generate 2.7% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

XRP  vs.  Braintrust

 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

Braintrust 
Braintrust Performance
1 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Braintrust are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Braintrust may actually be approaching a critical reversion point that can send shares even higher in September 2022.

Braintrust Price Channel

XRP and Braintrust Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with XRP and Braintrust

The main advantage of trading using opposite XRP and Braintrust positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if XRP position performs unexpectedly, Braintrust 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 Braintrust will offset losses from the drop in Braintrust's long position.
The idea behind XRP and Braintrust 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 Global Correlations module to find global opportunities by holding instruments from different markets.

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