Correlation Between XRP and PRO

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

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

Diversification Opportunities for XRP and PRO

0.7

Correlation Coefficient

XRP  PRO

Poor diversification

The 3 months correlation between XRP and PRO is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding XRP and PRO in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PRO 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 PRO. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PRO has no effect on the direction of XRP i.e., XRP and PRO go up and down completely randomly.

Pair Corralation between XRP and PRO

Assuming the 90 days trading horizon XRP is expected to generate 0.6 times more return on investment than PRO. However, XRP is 1.66 times less risky than PRO. It trades about 0.26 of its potential returns per unit of risk. PRO is currently generating about 0.08 per unit of risk. 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	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

XRP  vs.  PRO

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.

PRO

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in PRO are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, PRO exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with XRP and PRO

The main advantage of trading using opposite XRP and PRO positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if XRP position performs unexpectedly, PRO 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 PRO will offset losses from the drop in PRO's long position.

The idea behind XRP and PRO 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 Commodity Directory module to find actively traded commodities issued by global exchanges.