Correlation Between XRP and FTX Token

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

Diversification Opportunities for XRP and FTX Token

0.73
  Correlation Coefficient

Poor diversification

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

Pair Corralation between XRP and FTX Token

Assuming the 90 days trading horizon XRP is expected to generate 1.09 times less return on investment than FTX Token. But when comparing it to its historical volatility, XRP is 1.09 times less risky than FTX Token. It trades about 0.2 of its potential returns per unit of risk. FTX Token is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest  2,678  in FTX Token on May 15, 2022 and sell it today you would earn a total of  419.00  from holding FTX Token or generate 15.65% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy95.65%
ValuesDaily Returns

XRP  vs.  FTX Token

 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

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

FTX Token Price Channel

XRP and FTX Token Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with XRP and FTX Token

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

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