Correlation Between Xai and DGB

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

Diversification Opportunities for Xai and DGB

XaiDGBDiversified AwayXaiDGBDiversified Away100%
0.87
  Correlation Coefficient
 Xai
 DGB

Very poor diversification

The 3 months correlation between Xai and DGB is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Xai and DGB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DGB and Xai 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 Xai are associated (or correlated) with DGB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DGB has no effect on the direction of Xai i.e., Xai and DGB go up and down completely randomly.

Pair Corralation between Xai and DGB

Assuming the 90 days trading horizon Xai is expected to under-perform the DGB. In addition to that, Xai is 1.54 times more volatile than DGB. It trades about -0.29 of its total potential returns per unit of risk. DGB is currently generating about -0.2 per unit of volatility. If you would invest  1.06  in DGB on November 23, 2024 and sell it today you would lose (0.27) from holding DGB or give up 25.78% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthStrong
Accuracy100.0%
ValuesDaily Returns

Xai  vs.  DGB

 Performance 
JavaScript chart by amCharts 3.21.15Dec2025Feb -50050100
JavaScript chart by amCharts 3.21.15XAI DGB
       Timeline  
Xai 

Risk-Adjusted Performance

Very Weak

 
Weak
 
Strong
Over the last 90 days Xai 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 forward 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 Xai shareholders.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb0.10.150.20.250.30.350.4
DGB 

Risk-Adjusted Performance

Very Weak

 
Weak
 
Strong
Over the last 90 days DGB has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound fundamental drivers, DGB is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb0.0080.010.0120.0140.0160.0180.020.022

Xai and DGB Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-14.42-10.8-7.18-3.56-0.05353.056.269.4812.6915.9 0.00420.00440.00460.00480.00500.00520.00540.0056
JavaScript chart by amCharts 3.21.15XAI DGB
       Returns  

Pair Trading with Xai and DGB

The main advantage of trading using opposite Xai and DGB positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Xai position performs unexpectedly, DGB 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 DGB will offset losses from the drop in DGB's long position.
The idea behind Xai and DGB 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.

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