Correlation Between Chainlink and USD Coin

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

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

Diversification Opportunities for Chainlink and USD Coin

0.0

Correlation Coefficient

Chainlink  USD Coin

Pay attention - limited upside

The 3 months correlation between Chainlink and USD is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Chainlink and USD Coin in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on USD Coin 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 USD Coin. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of USD Coin has no effect on the direction of Chainlink i.e., Chainlink and USD Coin go up and down completely randomly.

Pair Corralation between Chainlink and USD Coin

Assuming the 90 days trading horizon Chainlink is expected to generate 27.44 times more return on investment than USD Coin. However, Chainlink is 27.44 times more volatile than USD Coin. It trades about 0.03 of its potential returns per unit of risk. USD Coin is currently generating about 0.0 per unit of risk. If you would invest  1,097  in Chainlink on January 19, 2024 and sell it today you would earn a total of  209.00  from holding Chainlink or generate 19.05% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Chainlink  vs.  USD Coin

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 latest unsteady performance, the Crypto's basic indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for Chainlink shareholders.

USD Coin

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Chainlink and USD Coin

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

The idea behind Chainlink and USD Coin 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 Transaction History module to view history of all your transactions and understand their impact on performance.