Correlation Between XRP and FXP

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

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

Diversification Opportunities for XRP and FXP

0.0

Correlation Coefficient

XRP  FXP

Pay attention - limited upside

The 3 months correlation between XRP and FXP is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding XRP and FXP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FXP 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 FXP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FXP has no effect on the direction of XRP i.e., XRP and FXP go up and down completely randomly.

Pair Corralation between XRP and FXP

If you would invest  38.00  in XRP on January 30, 2024 and sell it today you would earn a total of  14.00  from holding XRP or generate 36.84% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	57.97%
Values	Daily Returns

XRP  vs.  FXP

XRP

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in XRP are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, XRP may actually be approaching a critical reversion point that can send shares even higher in May 2024.

FXP

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with XRP and FXP

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

The idea behind XRP and FXP 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.