Correlation Between Polkadot and XRP

Specify exactly 2 symbols:
Can any of the company-specific risk be diversified away by investing in both Polkadot 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 Polkadot and XRP into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Polkadot and XRP, you can compare the effects of market volatilities on Polkadot 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 Polkadot with a short position of XRP. Check out your portfolio center. Please also check ongoing floating volatility patterns of Polkadot and XRP.

Diversification Opportunities for Polkadot and XRP

0.94
  Correlation Coefficient

Almost no diversification

The 3 months correlation between Polkadot and XRP is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Polkadot and XRP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on XRP and Polkadot 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 Polkadot 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 Polkadot i.e., Polkadot and XRP go up and down completely randomly.

Pair Corralation between Polkadot and XRP

Assuming the 90 days trading horizon Polkadot is expected to generate 1.41 times more return on investment than XRP. However, Polkadot is 1.41 times more volatile than XRP. It trades about 0.33 of its potential returns per unit of risk. XRP is currently generating about 0.26 per unit of risk. If you would invest  627.00  in Polkadot on May 11, 2022 and sell it today you would earn a total of  225.00  from holding Polkadot or generate 35.89% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Strong
Accuracy100.0%
ValuesDaily Returns

Polkadot  vs.  XRP

 Performance (%) 
       Timeline  
Polkadot 
Polkadot Performance
2 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Polkadot are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Polkadot may actually be approaching a critical reversion point that can send shares even higher in September 2022.

Polkadot Price Channel

XRP 
XRP Performance
1 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in XRP are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. 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

Polkadot and XRP Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Polkadot and XRP

The main advantage of trading using opposite Polkadot and XRP positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Polkadot 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 Polkadot 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.

Other Complementary Tools

Portfolio Optimization
Compute new portfolio that will generate highest expected return given your specified tolerance for risk
Go
Financial Widgets
Easily integrated Macroaxis content with over 30 different plug-and-play financial widgets
Go
Shere Portfolio
Track or share privately all of your investments from the convenience of any device
Go
Watchlist Optimization
Optimize watchlists to build efficient portfolio or rebalance existing positions based on mean-variance optimization algorithm
Go
Global Correlations
Find global opportunities by holding instruments from different markets
Go
Money Flow Index
Determine momentum by analyzing Money Flow Index and other technical indicators
Go
Focused Opportunities
Build portfolios using our predefined set of ideas and optimize them against your investing preferences
Go
Fund Screener
Find actively-traded funds from around the world traded on over 30 global exchanges
Go
Equity Search
Search for actively traded equities including funds and ETFs from over 30 global markets
Go
Portfolio Suggestion
Get suggestions outside of your existing asset allocation including your own model portfolios
Go
Instant Ratings
Determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance
Go
Positions Ratings
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
Go
Content Syndication
Quickly integrate customizable finance content to your own investment portal
Go