Correlation Between Bounce Finance and XRP

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

Diversification Opportunities for Bounce Finance and XRP

0.42
  Correlation Coefficient

Very weak diversification

The 3 months correlation between Bounce and XRP is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Bounce Finance Governance Toke and XRP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on XRP and Bounce Finance 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 Bounce Finance Governance are associated (or correlated) with XRP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of XRP has no effect on the direction of Bounce Finance i.e., Bounce Finance and XRP go up and down completely randomly.

Pair Corralation between Bounce Finance and XRP

Assuming the 90 days trading horizon Bounce Finance Governance is expected to generate 1.72 times more return on investment than XRP. However, Bounce Finance is 1.72 times more volatile than XRP. It trades about -0.04 of its potential returns per unit of risk. XRP is currently generating about -0.07 per unit of risk. If you would invest  5,185  in Bounce Finance Governance on May 16, 2022 and sell it today you would lose (4,137)  from holding Bounce Finance Governance or give up 79.79% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

Bounce Finance Governance Toke  vs.  XRP

 Performance (%) 
       Timeline  
Bounce Finance Gover 
Bounce Performance
9 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Bounce Finance Governance are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite quite weak forward indicators, Bounce Finance disclosed solid returns over the last few months and may actually be approaching a breakup point.

Bounce Price Channel

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

Bounce Finance and XRP Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Bounce Finance and XRP

The main advantage of trading using opposite Bounce Finance and XRP positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bounce Finance position performs unexpectedly, XRP 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 XRP will offset losses from the drop in XRP's long position.
The idea behind Bounce Finance Governance and XRP 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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