Correlation Between NEXO and Chainlink

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

Diversification Opportunities for NEXO and Chainlink

0.78
  Correlation Coefficient

Poor diversification

The 3 months correlation between NEXO and Chainlink is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding NEXO and Chainlink in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chainlink and NEXO 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 NEXO 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 NEXO i.e., NEXO and Chainlink go up and down completely randomly.

Pair Corralation between NEXO and Chainlink

Assuming the 90 days trading horizon NEXO is expected to under-perform the Chainlink. But the crypto coin apears to be less risky and, when comparing its historical volatility, NEXO is 1.16 times less risky than Chainlink. The crypto coin trades about 0.0 of its potential returns per unit of risk. The Chainlink is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  1,397  in Chainlink on December 30, 2023 and sell it today you would earn a total of  523.00  from holding Chainlink or generate 37.44% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

NEXO  vs.  Chainlink

 Performance 
       Timeline  
NEXO 

Risk-Adjusted Performance

14 of 100

 
Low
 
High
Good
Compared to the overall equity markets, risk-adjusted returns on investments in NEXO are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, NEXO exhibited solid returns over the last few months and may actually be approaching a breakup point.
Chainlink 

Risk-Adjusted Performance

9 of 100

 
Low
 
High
OK
Compared to the overall equity markets, risk-adjusted returns on investments in Chainlink are ranked lower than 9 (%) 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.

NEXO and Chainlink Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with NEXO and Chainlink

The main advantage of trading using opposite NEXO and Chainlink positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NEXO 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 NEXO 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.

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