Correlation Between Power Ledger and XRP
Can any of the company-specific risk be diversified away by investing in both Power Ledger 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 Power Ledger and XRP into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Power Ledger and XRP, you can compare the effects of market volatilities on Power Ledger 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 Power Ledger with a short position of XRP. Check out your portfolio center. Please also check ongoing floating volatility patterns of Power Ledger and XRP.
Diversification Opportunities for Power Ledger and XRP
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Power and XRP is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Power Ledger and XRP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on XRP and Power Ledger 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 Power Ledger 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 Power Ledger i.e., Power Ledger and XRP go up and down completely randomly.
Pair Corralation between Power Ledger and XRP
Assuming the 90 days trading horizon Power Ledger is expected to under-perform the XRP. In addition to that, Power Ledger is 1.42 times more volatile than XRP. It trades about -0.19 of its total potential returns per unit of risk. XRP is currently generating about -0.08 per unit of volatility. If you would invest 61.00 in XRP on January 26, 2024 and sell it today you would lose (6.00) from holding XRP or give up 9.84% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Power Ledger vs. XRP
Performance |
| Timeline |
| Power Ledger |
| XRP |
Power Ledger and XRP Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Power Ledger and XRP
The main advantage of trading using opposite Power Ledger and XRP positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Power Ledger 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.| Power Ledger vs. Solana | Power Ledger vs. XRP | Power Ledger vs. Staked Ether | Power Ledger vs. The Open Network |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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