Correlation Between XMR and Dogecoin

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

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

Diversification Opportunities for XMR and Dogecoin

0.11

Correlation Coefficient

XMR  Dogecoin

Average diversification

The 3 months correlation between XMR and Dogecoin is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding XMR and Dogecoin in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dogecoin and XMR 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 XMR 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 XMR i.e., XMR and Dogecoin go up and down completely randomly.

Pair Corralation between XMR and Dogecoin

Assuming the 90 days trading horizon XMR is expected to generate 2.17 times less return on investment than Dogecoin. But when comparing it to its historical volatility, XMR is 1.57 times less risky than Dogecoin. It trades about 0.04 of its potential returns per unit of risk. Dogecoin is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  6.16  in Dogecoin on March 12, 2024 and sell it today you would earn a total of  8.84  from holding Dogecoin or generate 143.51% return on investment over 90 days.

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

XMR  vs.  Dogecoin

XMR

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in XMR are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, XMR exhibited solid returns over the last few months and may actually be approaching a breakup point.

Dogecoin

Risk-Adjusted Performance

0 of 100

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 rather sound basic indicators, Dogecoin is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with XMR and Dogecoin

The main advantage of trading using opposite XMR and Dogecoin positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if XMR 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.

The idea behind XMR 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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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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.