Correlation Between XDC Network and SWRV

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

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

Diversification Opportunities for XDC Network and SWRV

-0.39

Correlation Coefficient

XDC Network  SWRV

Very good diversification

The 3 months correlation between XDC and SWRV is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding XDC Network and SWRV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SWRV 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 SWRV. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SWRV has no effect on the direction of XDC Network i.e., XDC Network and SWRV go up and down completely randomly.

Pair Corralation between XDC Network and SWRV

Assuming the 90 days trading horizon XDC Network is expected to generate 0.37 times more return on investment than SWRV. However, XDC Network is 2.68 times less risky than SWRV. It trades about 0.35 of its potential returns per unit of risk. SWRV is currently generating about -0.11 per unit of risk. If you would invest  5.82  in XDC Network on April 15, 2025 and sell it today you would earn a total of  1.16  from holding XDC Network or generate 19.93% 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.  SWRV

XDC Network

Risk-Adjusted Performance

Very Weak

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

SWRV

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in SWRV are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady fundamental indicators, SWRV exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with XDC Network and SWRV

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

The idea behind XDC Network and SWRV 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.