Correlation Between Chainlink and Staked Ether

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

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

Diversification Opportunities for Chainlink and Staked Ether

0.2

Correlation Coefficient

Chainlink  Staked Ether

Modest diversification

The 3 months correlation between Chainlink and Staked is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Chainlink and Staked Ether in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Staked Ether 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 Staked Ether. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Staked Ether has no effect on the direction of Chainlink i.e., Chainlink and Staked Ether go up and down completely randomly.

Pair Corralation between Chainlink and Staked Ether

Assuming the 90 days trading horizon Chainlink is expected to under-perform the Staked Ether. In addition to that, Chainlink is 1.14 times more volatile than Staked Ether. It trades about -0.16 of its total potential returns per unit of risk. Staked Ether is currently generating about -0.08 per unit of volatility. If you would invest  355,295  in Staked Ether on February 1, 2024 and sell it today you would lose (57,148) from holding Staked Ether or give up 16.08% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Chainlink  vs.  Staked Ether

Chainlink

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Chainlink has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Crypto's basic indicators remain rather sound which may send shares a bit higher in June 2024. The latest tumult may also be a sign of longer-term up-swing for Chainlink shareholders.

Staked Ether

Risk-Adjusted Performance

9 of 100

OK

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

Pair Trading with Chainlink and Staked Ether

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

The idea behind Chainlink and Staked Ether 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.