Correlation Between Solana and Chainlink

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

Diversification Opportunities for Solana and Chainlink

0.26
  Correlation Coefficient

Modest diversification

The 3 months correlation between Solana and Chainlink is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Solana and Chainlink in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chainlink and Solana 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 Solana 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 Solana i.e., Solana and Chainlink go up and down completely randomly.

Pair Corralation between Solana and Chainlink

Assuming the 90 days trading horizon Solana is expected to generate 0.95 times more return on investment than Chainlink. However, Solana is 1.05 times less risky than Chainlink. It trades about -0.14 of its potential returns per unit of risk. Chainlink is currently generating about -0.19 per unit of risk. If you would invest  17,272  in Solana on January 22, 2024 and sell it today you would lose (2,903) from holding Solana or give up 16.81% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

Solana  vs.  Chainlink

 Performance 
       Timeline  
Solana 

Risk-Adjusted Performance

14 of 100

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

Risk-Adjusted Performance

1 of 100

 
Weak
 
Strong
Weak
Compared to the overall equity markets, risk-adjusted returns on investments in Chainlink are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, Chainlink is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Solana and Chainlink Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Solana and Chainlink

The main advantage of trading using opposite Solana and Chainlink positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Solana 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 Solana 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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.

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