Correlation Between COCOS BCX and XRP

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

Diversification Opportunities for COCOS BCX and XRP

0.03
  Correlation Coefficient

Significant diversification

The 3 months correlation between COCOS and XRP is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding COCOS BCX and XRP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on XRP and COCOS BCX 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 COCOS BCX 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 COCOS BCX i.e., COCOS BCX and XRP go up and down completely randomly.

Pair Corralation between COCOS BCX and XRP

Assuming the 90 days trading horizon COCOS BCX is expected to generate 68.07 times more return on investment than XRP. However, COCOS BCX is 68.07 times more volatile than XRP. It trades about 0.38 of its potential returns per unit of risk. XRP is currently generating about 0.03 per unit of risk. If you would invest  76.00  in COCOS BCX on September 2, 2022 and sell it today you would lose (25.00)  from holding COCOS BCX or give up 32.89% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

COCOS BCX  vs.  XRP

 Performance (%) 
       Timeline  
COCOS BCX 
COCOS Performance
23 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in COCOS BCX are ranked lower than 23 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, COCOS BCX sustained solid returns over the last few months and may actually be approaching a breakup point.

COCOS Price Channel

XRP 
XRP Performance
6 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in XRP are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, XRP sustained solid returns over the last few months and may actually be approaching a breakup point.

XRP Price Channel

COCOS BCX and XRP Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with COCOS BCX and XRP

The main advantage of trading using opposite COCOS BCX and XRP positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if COCOS BCX 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.
COCOS BCX vs. XRP
COCOS BCX vs. Polygon
COCOS BCX vs. Chainlink
COCOS BCX vs. Solana
The idea behind COCOS BCX 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.
XRP vs. Polygon
XRP vs. Chainlink
XRP vs. Solana
XRP vs. Polkadot
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 Watchlist Optimization module to optimize watchlists to build efficient portfolio or rebalance existing positions based on mean-variance optimization algorithm.

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