Correlation Between Polkadot and Chainlink

Specify exactly 2 symbols:
Can any of the company-specific risk be diversified away by investing in both Polkadot 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 Polkadot and Chainlink into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Polkadot and Chainlink, you can compare the effects of market volatilities on Polkadot 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 Polkadot with a short position of Chainlink. Check out your portfolio center. Please also check ongoing floating volatility patterns of Polkadot and Chainlink.

Diversification Opportunities for Polkadot and Chainlink

0.68
  Correlation Coefficient

Poor diversification

The 3 months correlation between Polkadot and Chainlink is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Polkadot and Chainlink in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chainlink and Polkadot 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 Polkadot 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 Polkadot i.e., Polkadot and Chainlink go up and down completely randomly.

Pair Corralation between Polkadot and Chainlink

Assuming the 90 days trading horizon Polkadot is expected to under-perform the Chainlink. But the crypto coin apears to be less risky and, when comparing its historical volatility, Polkadot is 1.01 times less risky than Chainlink. The crypto coin trades about -0.09 of its potential returns per unit of risk. The Chainlink is currently generating about -0.07 of returns per unit of risk over similar time horizon. If you would invest  2,827  in Chainlink on May 9, 2022 and sell it today you would lose (2,041)  from holding Chainlink or give up 72.2% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

Polkadot  vs.  Chainlink

 Performance (%) 
       Timeline  
Polkadot 
Polkadot Performance
0 of 100
Over the last 90 days Polkadot has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Crypto's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for Polkadot investors.

Polkadot Price Channel

Chainlink 
Chainlink Performance
1 of 100
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. Despite somewhat weak basic indicators, Chainlink may actually be approaching a critical reversion point that can send shares even higher in September 2022.

Chainlink Price Channel

Polkadot and Chainlink Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Polkadot and Chainlink

The main advantage of trading using opposite Polkadot and Chainlink positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Polkadot 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 Polkadot 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.

Other Complementary Tools

Analyst Recommendations
Analyst recommendations and target price estimates broken down by several categories
Go
Theme Ratings
Determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance
Go
Fundamentals Comparison
Compare fundamentals across multiple equities to find investing opportunities
Go
Portfolio Diagnostics
Use generated alerts and portfolio events aggregator to diagnose current holdings
Go
Money Managers
Screen money managers from public funds and ETFs managed around the world
Go
Portfolio Suggestion
Get suggestions outside of your existing asset allocation including your own model portfolios
Go
Balance Of Power
Check stock momentum by analyzing Balance Of Power indicator and other technical ratios
Go
Crypto Correlations
Use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins
Go
Watchlist Optimization
Optimize watchlists to build efficient portfolio or rebalance existing positions based on mean-variance optimization algorithm
Go
Sync Your Broker
Sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors.
Go
Portfolio Center
All portfolio management and optimization tools to improve performance of your portfolios
Go
Fund Screener
Find actively-traded funds from around the world traded on over 30 global exchanges
Go
Portfolio Rebalancing
Analyze risk-adjusted returns against different time horizons to find asset-allocation targets
Go