Correlation Between XRP and EGold

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

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

Diversification Opportunities for XRP and EGold

0.31

Correlation Coefficient

XRP  EGold

Weak diversification

The 3 months correlation between XRP and EGold is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding XRP and eGold in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on eGold 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 EGold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of eGold has no effect on the direction of XRP i.e., XRP and EGold go up and down completely randomly.

Pair Corralation between XRP and EGold

Assuming the 90 days trading horizon XRP is expected to generate 0.73 times more return on investment than EGold. However, XRP is 1.36 times less risky than EGold. It trades about 0.2 of its potential returns per unit of risk. eGold is currently generating about 0.06 per unit of risk. If you would invest  222.00  in XRP on April 20, 2025 and sell it today you would earn a total of  116.00  from holding XRP or generate 52.25% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

XRP  vs.  eGold

XRP

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in XRP are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, XRP exhibited solid returns over the last few months and may actually be approaching a breakup point.

eGold

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in eGold are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady fundamental indicators, EGold exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with XRP and EGold

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

The idea behind XRP and eGold 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.