Correlation Between Qtum and XRP
Can any of the company-specific risk be diversified away by investing in both Qtum 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 Qtum and XRP into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Qtum and XRP, you can compare the effects of market volatilities on Qtum 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 Qtum with a short position of XRP. Check out your portfolio center. Please also check ongoing floating volatility patterns of Qtum and XRP.
Diversification Opportunities for Qtum and XRP
Very poor diversification
The 3 months correlation between Qtum and XRP is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Qtum and XRP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on XRP and Qtum 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 Qtum 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 Qtum i.e., Qtum and XRP go up and down completely randomly.
Pair Corralation between Qtum and XRP
Assuming the 90 days trading horizon Qtum is expected to generate 1.42 times more return on investment than XRP. However, Qtum is 1.42 times more volatile than XRP. It trades about 0.14 of its potential returns per unit of risk. XRP is currently generating about 0.06 per unit of risk. If you would invest 280.00 in Qtum on January 24, 2024 and sell it today you would earn a total of 141.00 from holding Qtum or generate 50.36% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Qtum vs. XRP
Performance |
| Timeline |
| Qtum |
| XRP |
Qtum and XRP Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Qtum and XRP
The main advantage of trading using opposite Qtum and XRP positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Qtum 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 Qtum 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 the Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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