Correlation Between Bitcoin Gold and Chainlink

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

Diversification Opportunities for Bitcoin Gold and Chainlink

0.62
  Correlation Coefficient

Poor diversification

The 3 months correlation between Bitcoin and Chainlink is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Bitcoin Gold and Chainlink in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chainlink and Bitcoin Gold 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 Bitcoin Gold are associated (or correlated) with Chainlink. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chainlink has no effect on the direction of Bitcoin Gold i.e., Bitcoin Gold and Chainlink go up and down completely randomly.

Pair Corralation between Bitcoin Gold and Chainlink

Assuming the 90 days trading horizon Bitcoin Gold is expected to generate 1.47 times more return on investment than Chainlink. However, Bitcoin Gold is 1.47 times more volatile than Chainlink. It trades about 0.36 of its potential returns per unit of risk. Chainlink is currently generating about 0.02 per unit of risk. If you would invest  2,628  in Bitcoin Gold on December 29, 2023 and sell it today you would earn a total of  1,937  from holding Bitcoin Gold or generate 73.71% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

Bitcoin Gold  vs.  Chainlink

 Performance 
       Timeline  
Bitcoin Gold 

Risk-Adjusted Performance

17 of 100

 
Low
 
High
Solid
Compared to the overall equity markets, risk-adjusted returns on investments in Bitcoin Gold are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady technical and fundamental indicators, Bitcoin Gold exhibited solid returns over the last few months and may actually be approaching a breakup point.
Chainlink 

Risk-Adjusted Performance

8 of 100

 
Low
 
High
OK
Compared to the overall equity markets, risk-adjusted returns on investments in Chainlink are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, Chainlink exhibited solid returns over the last few months and may actually be approaching a breakup point.

Bitcoin Gold and Chainlink Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Bitcoin Gold and Chainlink

The main advantage of trading using opposite Bitcoin Gold and Chainlink positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bitcoin Gold position performs unexpectedly, Chainlink 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 Chainlink will offset losses from the drop in Chainlink's long position.
The idea behind Bitcoin Gold and Chainlink 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.
Check out your portfolio center.
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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.

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