Correlation Between XWC and Dogecoin

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Can any of the company-specific risk be diversified away by investing in both XWC and Dogecoin 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 XWC and Dogecoin into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between XWC and Dogecoin, you can compare the effects of market volatilities on XWC and Dogecoin 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 XWC with a short position of Dogecoin. Check out your portfolio center. Please also check ongoing floating volatility patterns of XWC and Dogecoin.

Diversification Opportunities for XWC and Dogecoin

0.08
  Correlation Coefficient

Significant diversification

The 3 months correlation between XWC and Dogecoin is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding XWC and Dogecoin in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dogecoin and XWC 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 XWC are associated (or correlated) with Dogecoin. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dogecoin has no effect on the direction of XWC i.e., XWC and Dogecoin go up and down completely randomly.

Pair Corralation between XWC and Dogecoin

Assuming the 90 days trading horizon XWC is expected to generate 27.31 times more return on investment than Dogecoin. However, XWC is 27.31 times more volatile than Dogecoin. It trades about 0.13 of its potential returns per unit of risk. Dogecoin is currently generating about -0.02 per unit of risk. If you would invest  10.00  in XWC on July 5, 2022 and sell it today you would lose (1.91)  from holding XWC or give up 19.1% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

XWC  vs.  Dogecoin

 Performance (%) 
       Timeline  
XWC 
XWC Performance
9 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in XWC are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, XWC sustained solid returns over the last few months and may actually be approaching a breakup point.

XWC Price Channel

Dogecoin 
Dogecoin Performance
0 of 100
Over the last 90 days Dogecoin has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong technical and fundamental indicators, Dogecoin is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Dogecoin Price Channel

XWC and Dogecoin Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with XWC and Dogecoin

The main advantage of trading using opposite XWC and Dogecoin positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if XWC position performs unexpectedly, Dogecoin 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 Dogecoin will offset losses from the drop in Dogecoin's long position.
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The idea behind XWC and Dogecoin 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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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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.

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