Correlation Between XRP and Bitcoin SV
Can any of the company-specific risk be diversified away by investing in both XRP and Bitcoin SV 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 Bitcoin SV into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between XRP and Bitcoin SV, you can compare the effects of market volatilities on XRP and Bitcoin SV 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 Bitcoin SV. Check out your portfolio center. Please also check ongoing floating volatility patterns of XRP and Bitcoin SV.
Diversification Opportunities for XRP and Bitcoin SV
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between XRP and Bitcoin is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding XRP and Bitcoin SV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bitcoin SV 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 Bitcoin SV. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bitcoin SV has no effect on the direction of XRP i.e., XRP and Bitcoin SV go up and down completely randomly.
Pair Corralation between XRP and Bitcoin SV
Assuming the 90 days trading horizon XRP is expected to generate 1.28 times less return on investment than Bitcoin SV. But when comparing it to its historical volatility, XRP is 1.05 times less risky than Bitcoin SV. It trades about 0.02 of its potential returns per unit of risk. Bitcoin SV is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 7,037 in Bitcoin SV on January 26, 2024 and sell it today you would earn a total of 91.00 from holding Bitcoin SV or generate 1.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
XRP vs. Bitcoin SV
Performance |
| Timeline |
| XRP |
| Bitcoin SV |
XRP and Bitcoin SV Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with XRP and Bitcoin SV
The main advantage of trading using opposite XRP and Bitcoin SV positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if XRP position performs unexpectedly, Bitcoin SV 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 Bitcoin SV will offset losses from the drop in Bitcoin SV's long position.The idea behind XRP and Bitcoin SV 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
Other Complementary Tools
| Earnings Calls Check upcoming earnings announcements updated hourly across public exchanges | |
| Efficient Frontier Plot and analyze your portfolio and positions against risk-return landscape of the market. | |
| Portfolio Holdings Check your current holdings and cash postion to detemine if your portfolio needs rebalancing | |
| Price Ceiling Movement Calculate and plot Price Ceiling Movement for different equity instruments | |
| AI Portfolio Architect Use AI to generate optimal portfolios and find profitable investment opportunities | |
| Headlines Timeline Stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity |