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Distributed video coding (DVC) is rapidly gaining popularity as a low cost, robust video coding solution, that reduces video encoding complexity. DVC is built on distributed source coding (DSC) principles where correlation between sources to be compressed is exploited at the decoder side. In the case of DVC, a current frame available only at the encoder is estimated at the decoder with side information generated from other frames available at the decoder. One of the main challenges in DVC design is that correlation among the source and side information needs to be estimated online and as accurately as possible. Since correlation dynamically changes with the scene, in order to exploit the robustness of DSC code designs, we integrate particle filtering (PF) with standard belief propagation (BP) decoding for inference on one joint factor graph to estimate correlation among source and side information. Correlation estimation is performed online as it is carried out jointly with decoding of the graph-based DSC code. Moreover, we demonstrate our joint bit-plane decoding with adaptive correlation estimation schemes within state-of-the-art DVC systems, which are transform-domain based with a feedback channel for rate adaptation. Experimental results show that our proposed system gives a significant performance improvement compared to the benchmark state-of-the-art DISCOVER codec (including correlation estimation) and the case without dynamic PF tracking, due to improved knowledge of timely correlation statistics via the combination of joint bit-plane decoding and particle-based BP (PBP) tracking.