Correlation Between Dogecoin and XWC

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

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

Diversification Opportunities for Dogecoin and XWC

0.47

Correlation Coefficient

Dogecoin  XWC

Very weak diversification

The 3 months correlation between Dogecoin and XWC is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Dogecoin and XWC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on XWC and Dogecoin 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 Dogecoin are associated (or correlated) with XWC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of XWC has no effect on the direction of Dogecoin i.e., Dogecoin and XWC go up and down completely randomly.

Pair Corralation between Dogecoin and XWC

Assuming the 90 days trading horizon Dogecoin is expected to under-perform the XWC. In addition to that, Dogecoin is 2.47 times more volatile than XWC. It trades about -0.16 of its total potential returns per unit of risk. XWC is currently generating about -0.05 per unit of volatility. If you would invest  3.41  in XWC on November 28, 2024 and sell it today you would lose (0.30) from holding XWC or give up 8.8% of portfolio value over 90 days.

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

Dogecoin  vs.  XWC

Dogecoin

Risk-Adjusted Performance

Very Weak

Over the last 90 days Dogecoin has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Crypto's fundamental indicators remain rather sound which may send shares a bit higher in March 2025. The latest tumult may also be a sign of longer-term up-swing for Dogecoin shareholders.

XWC

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Dogecoin and XWC

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

The idea behind Dogecoin and XWC 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 Stocks Directory module to find actively traded stocks across global markets.