Correlation Between Optimism and Chainlink

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

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

Diversification Opportunities for Optimism and Chainlink

0.81

Correlation Coefficient

Optimism  Chainlink

Very poor diversification

The 3 months correlation between Optimism and Chainlink is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Optimism and Chainlink in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chainlink and Optimism 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 Optimism 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 Optimism i.e., Optimism and Chainlink go up and down completely randomly.

Pair Corralation between Optimism and Chainlink

Assuming the 90 days horizon Optimism is expected to generate 2.12 times less return on investment than Chainlink. In addition to that, Optimism is 1.45 times more volatile than Chainlink. It trades about 0.03 of its total potential returns per unit of risk. Chainlink is currently generating about 0.1 per unit of volatility. If you would invest  1,414  in Chainlink on April 20, 2025 and sell it today you would earn a total of  351.00  from holding Chainlink or generate 24.82% return on investment over 90 days.

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

Optimism  vs.  Chainlink

Optimism

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Optimism are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady fundamental indicators, Optimism exhibited solid returns over the last few months and may actually be approaching a breakup point.

Chainlink

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Chainlink are ranked lower than 7 (%) 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.

Pair Trading with Optimism and Chainlink

The main advantage of trading using opposite Optimism and Chainlink positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Optimism 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 Optimism 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.