diversifiable risk of combining XRP and Solana into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between XRP and Solana, you can compare the effects of market volatilities on XRP and Solana 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 Solana. Check out your portfolio center. Please also check ongoing floating volatility patterns of XRP and Solana.
Diversification Opportunities for XRP and Solana
Pair Corralation between XRP and Solana
Assuming the 90 days trading horizon XRP is expected to generate 0.87 times more return on investment than Solana. However, XRP is 1.15 times less risky than Solana. It trades about 0.27 of its potential returns per unit of risk. Solana is currently generating about 0.12 per unit of risk. If you would invest 51.00 in XRP on November 30, 2023 and sell it today you would earn a total of 8.00 from holding XRP or generate 15.69% return on investment over 90 days.
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XRP vs. Solana
Pair Trading with XRP and SolanaThe main advantage of trading using opposite XRP and Solana positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if XRP position performs unexpectedly, Solana 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 Solana will offset losses from the drop in Solana's long position. The idea behind XRP and Solana 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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