Correlation Between Bitcoin SV and XRP
Can any of the company-specific risk be diversified away by investing in both Bitcoin SV 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 Bitcoin SV and XRP into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bitcoin SV and XRP, you can compare the effects of market volatilities on Bitcoin SV 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 Bitcoin SV with a short position of XRP. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bitcoin SV and XRP.
Diversification Opportunities for Bitcoin SV and XRP
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Bitcoin and XRP is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Bitcoin SV and XRP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on XRP and Bitcoin SV 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 Bitcoin SV 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 Bitcoin SV i.e., Bitcoin SV and XRP go up and down completely randomly.
Pair Corralation between Bitcoin SV and XRP
Assuming the 90 days trading horizon Bitcoin SV is expected to generate 1.56 times more return on investment than XRP. However, Bitcoin SV is 1.56 times more volatile than XRP. It trades about -0.01 of its potential returns per unit of risk. XRP is currently generating about -0.18 per unit of risk. If you would invest 7,121 in Bitcoin SV on January 16, 2024 and sell it today you would lose (460.00) from holding Bitcoin SV or give up 6.46% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bitcoin SV vs. XRP
Performance |
| Timeline |
| Bitcoin SV |
| XRP |
Bitcoin SV and XRP Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bitcoin SV and XRP
The main advantage of trading using opposite Bitcoin SV and XRP positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bitcoin SV 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 Bitcoin SV 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 Transaction History module to view history of all your transactions and understand their impact on performance.
Other Complementary Tools
| Bond Analysis Evaluate and analyze corporate bonds as a potential investment for your portfolios. | |
| Headlines Timeline Stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity | |
| Portfolio Suggestion Get suggestions outside of your existing asset allocation including your own model portfolios | |
| Efficient Frontier Plot and analyze your portfolio and positions against risk-return landscape of the market. | |
| Performance Analysis Check effects of mean-variance optimization against your current asset allocation | |
| Idea Analyzer Analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas | |
| Portfolio Dashboard Portfolio dashboard that provides centralized access to all your investments | |
| Portfolio Analyzer Portfolio analysis module that provides access to portfolio diagnostics and optimization engine | |
| Positions Ratings Determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Crypto Correlations Use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins | |
| Aroon Oscillator Analyze current equity momentum using Aroon Oscillator and other momentum ratios |