Correlation Between Staked Ether and XRP

Can any of the company-specific risk be diversified away by investing in both Staked Ether 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 Staked Ether and XRP into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Staked Ether and XRP, you can compare the effects of market volatilities on Staked Ether 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 Staked Ether with a short position of XRP. Check out your portfolio center. Please also check ongoing floating volatility patterns of Staked Ether and XRP.

Diversification Opportunities for Staked Ether and XRP

0.87

Correlation Coefficient

Staked Ether  XRP

Very poor diversification

The 3 months correlation between Staked and XRP is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Staked Ether and XRP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on XRP and Staked Ether 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 Staked Ether 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 Staked Ether i.e., Staked Ether and XRP go up and down completely randomly.

Pair Corralation between Staked Ether and XRP

Assuming the 90 days trading horizon Staked Ether is expected to generate 2.78 times less return on investment than XRP. But when comparing it to its historical volatility, Staked Ether is 1.77 times less risky than XRP. It trades about 0.2 of its potential returns per unit of risk. XRP is currently generating about 0.31 of returns per unit of risk over similar time horizon. If you would invest  56.00  in XRP on September 1, 2024 and sell it today you would earn a total of  124.00  from holding XRP or generate 221.43% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	100.0%
Values	Daily Returns

Staked Ether  vs.  XRP

Staked Ether

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Staked Ether are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady fundamental indicators, Staked Ether exhibited solid returns over the last few months and may actually be approaching a breakup point.

XRP

Risk-Adjusted Performance

24 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in XRP are ranked lower than 24 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, XRP exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Staked Ether and XRP

The main advantage of trading using opposite Staked Ether and XRP positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Staked Ether 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 Staked Ether 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.

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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 the Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.