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

0.66
  Correlation Coefficient

Poor diversification

The 3 months correlation between Solana and Chainlink is 0.66. 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 under-perform the Chainlink. In addition to that, Solana is 1.86 times more volatile than Chainlink. It trades about -0.21 of its total potential returns per unit of risk. Chainlink is currently generating about 0.0 per unit of volatility. If you would invest  769.00  in Chainlink on August 30, 2022 and sell it today you would lose (49.00)  from holding Chainlink or give up 6.37% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

Solana  vs.  Chainlink

 Performance (%) 
       Timeline  
Solana 
Solana Performance
0 of 100
Over the last 90 days Solana has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Crypto's basic indicators remain somewhat strong which may send shares a bit higher in December 2022. The current disturbance may also be a sign of long term up-swing for Solana investors.

Solana Price Channel

Chainlink 
Chainlink Performance
3 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Chainlink are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Chainlink sustained solid returns over the last few months and may actually be approaching a breakup point.

Chainlink Price Channel

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.
Solana vs. XRP
Solana vs. Polygon
Solana vs. Chainlink
Solana vs. Polkadot
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.
Chainlink vs. XRP
Chainlink vs. Solana
Chainlink vs. Polygon
Chainlink vs. Polkadot
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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.

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