Correlation Between XDC Network and BOUNTY

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

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

Diversification Opportunities for XDC Network and BOUNTY

-0.29

Correlation Coefficient

XDC Network  BOUNTY

Very good diversification

The 3 months correlation between XDC and BOUNTY is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding XDC Network and BOUNTY in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BOUNTY and XDC 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 XDC Network are associated (or correlated) with BOUNTY. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BOUNTY has no effect on the direction of XDC Network i.e., XDC Network and BOUNTY go up and down completely randomly.

Pair Corralation between XDC Network and BOUNTY

Assuming the 90 days trading horizon XDC Network is expected to generate 0.36 times more return on investment than BOUNTY. However, XDC Network is 2.81 times less risky than BOUNTY. It trades about 0.12 of its potential returns per unit of risk. BOUNTY is currently generating about -0.08 per unit of risk. If you would invest  7.57  in XDC Network on April 24, 2025 and sell it today you would earn a total of  1.99  from holding XDC Network or generate 26.29% return on investment over 90 days.

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

XDC Network  vs.  BOUNTY

XDC Network

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in XDC Network are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady fundamental indicators, XDC Network exhibited solid returns over the last few months and may actually be approaching a breakup point.

BOUNTY

Risk-Adjusted Performance

Very Weak

Over the last 90 days BOUNTY has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unsteady performance in the last few months, the Crypto's basic indicators remain somewhat strong which may send shares a bit higher in August 2025. The current disturbance may also be a sign of long term up-swing for BOUNTY investors.

Pair Trading with XDC Network and BOUNTY

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

The idea behind XDC Network and BOUNTY 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.