Correlation Between XCAD Network and Decred

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

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

Diversification Opportunities for XCAD Network and Decred

0.47

Correlation Coefficient

XCAD Network  Decred

Very weak diversification

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

Pair Corralation between XCAD Network and Decred

Assuming the 90 days trading horizon XCAD Network is expected to under-perform the Decred. But the crypto coin apears to be less risky and, when comparing its historical volatility, XCAD Network is 1.14 times less risky than Decred. The crypto coin trades about -0.36 of its potential returns per unit of risk. The Decred is currently generating about -0.15 of returns per unit of risk over similar time horizon. If you would invest  2,386  in Decred on January 31, 2024 and sell it today you would lose (447.00) from holding Decred or give up 18.73% of portfolio value over 90 days.

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

XCAD Network  vs.  Decred

XCAD Network

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days XCAD Network has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, XCAD Network is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Decred

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Decred are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, Decred exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with XCAD Network and Decred

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

The idea behind XCAD Network and Decred 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.