Correlation Between XT Token and SRM

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

By analyzing existing cross correlation between XT Token and SRM, you can compare the effects of market volatilities on XT Token and SRM 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 XT Token with a short position of SRM. Check out your portfolio center. Please also check ongoing floating volatility patterns of XT Token and SRM.

Diversification Opportunities for XT Token and SRM

-0.31

Correlation Coefficient

XT Token  SRM

Very good diversification

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

Pair Corralation between XT Token and SRM

Assuming the 90 days horizon XT Token is expected to generate 0.37 times more return on investment than SRM. However, XT Token is 2.7 times less risky than SRM. It trades about 0.14 of its potential returns per unit of risk. SRM is currently generating about -0.02 per unit of risk. If you would invest  467.00  in XT Token on April 21, 2025 and sell it today you would earn a total of  82.00  from holding XT Token or generate 17.56% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

XT Token  vs.  SRM

XT Token

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in XT Token are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady fundamental indicators, XT Token exhibited solid returns over the last few months and may actually be approaching a breakup point.

SRM

Risk-Adjusted Performance

Very Weak

Over the last 90 days SRM has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Crypto's primary indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for SRM shareholders.

Pair Trading with XT Token and SRM

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

The idea behind XT Token and SRM 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.