Correlation Between Chainlink and WAL Token

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

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

Diversification Opportunities for Chainlink and WAL Token

0.55

Correlation Coefficient

Chainlink  WAL Token

Very weak diversification

The 3 months correlation between Chainlink and WAL is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Chainlink and WAL Token in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WAL Token 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 WAL Token. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WAL Token has no effect on the direction of Chainlink i.e., Chainlink and WAL Token go up and down completely randomly.

Pair Corralation between Chainlink and WAL Token

Assuming the 90 days trading horizon Chainlink is expected to generate 0.74 times more return on investment than WAL Token. However, Chainlink is 1.36 times less risky than WAL Token. It trades about 0.11 of its potential returns per unit of risk. WAL Token is currently generating about 0.01 per unit of risk. If you would invest  1,414  in Chainlink on April 21, 2025 and sell it today you would earn a total of  412.00  from holding Chainlink or generate 29.14% return on investment over 90 days.

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

Chainlink  vs.  WAL Token

Chainlink

Risk-Adjusted Performance

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 fundamental indicators, Chainlink exhibited solid returns over the last few months and may actually be approaching a breakup point.

WAL Token

Risk-Adjusted Performance

Very Weak

Over the last 90 days WAL Token has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound essential indicators, WAL Token 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 WAL Token

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

The idea behind Chainlink and WAL Token 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.