Correlation Between Ethena USDe and XRP

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

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

Diversification Opportunities for Ethena USDe and XRP

0.0

Correlation Coefficient

Ethena USDe  XRP

Pay attention - limited upside

The 3 months correlation between Ethena and XRP is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Ethena USDe and XRP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on XRP and Ethena USDe 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 Ethena USDe 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 Ethena USDe i.e., Ethena USDe and XRP go up and down completely randomly.

Pair Corralation between Ethena USDe and XRP

If you would invest  57.00  in XRP on August 30, 2024 and sell it today you would earn a total of  89.00  from holding XRP or generate 156.14% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Ethena USDe  vs.  XRP

Ethena USDe

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ethena USDe has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound fundamental indicators, Ethena USDe is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

XRP

Risk-Adjusted Performance

20 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in XRP are ranked lower than 20 (%) 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 Ethena USDe and XRP

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