Correlation Between Chainlink and Maker
Can any of the company-specific risk be diversified away by investing in both Chainlink and Maker 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 Chainlink and Maker into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Chainlink and Maker, you can compare the effects of market volatilities on Chainlink and Maker 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 Chainlink with a short position of Maker. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chainlink and Maker.
Diversification Opportunities for Chainlink and Maker
Very weak diversification
The 3 months correlation between Chainlink and Maker is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Chainlink and Maker in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Maker and Chainlink 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 Chainlink are associated (or correlated) with Maker. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Maker has no effect on the direction of Chainlink i.e., Chainlink and Maker go up and down completely randomly.
Pair Corralation between Chainlink and Maker
Assuming the 90 days trading horizon Chainlink is expected to generate 26.37 times less return on investment than Maker. But when comparing it to its historical volatility, Chainlink is 1.09 times less risky than Maker. It trades about 0.01 of its potential returns per unit of risk. Maker is currently generating about 0.36 of returns per unit of risk over similar time horizon. If you would invest 217,632 in Maker on December 29, 2023 and sell it today you would earn a total of 115,609 from holding Maker or generate 53.12% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Chainlink vs. Maker
Performance |
Timeline |
Chainlink |
Maker |
Chainlink and Maker Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Chainlink and Maker
The main advantage of trading using opposite Chainlink and Maker positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chainlink position performs unexpectedly, Maker 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 Maker will offset losses from the drop in Maker's long position.The idea behind Chainlink and Maker 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
Other Complementary Tools
Money Flow Index Determine momentum by analyzing Money Flow Index and other technical indicators | |
Content Syndication Quickly integrate customizable finance content to your own investment portal | |
Theme Ratings Determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
Portfolio Holdings Check your current holdings and cash postion to detemine if your portfolio needs rebalancing | |
Bollinger Bands Use Bollinger Bands indicator to analyze target price for a given investing horizon | |
Watchlist Optimization Optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm | |
Technical Analysis Check basic technical indicators and analysis based on most latest market data | |
Portfolio Analyzer Portfolio analysis module that provides access to portfolio diagnostics and optimization engine | |
Odds Of Bankruptcy Get analysis of equity chance of financial distress in the next 2 years | |
Headlines Timeline Stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity | |
Performance Analysis Check effects of mean-variance optimization against your current asset allocation | |
Options Analysis Analyze and evaluate options and option chains as a potential hedge for your portfolios |