Correlation Between Chainlink and Ethena
Can any of the company-specific risk be diversified away by investing in both Chainlink and Ethena 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 Chainlink and Ethena into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Chainlink and Ethena, you can compare the effects of market volatilities on Chainlink and Ethena 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 Chainlink with a short position of Ethena. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chainlink and Ethena.
Diversification Opportunities for Chainlink and Ethena
Almost no diversification
The 3 months correlation between Chainlink and Ethena is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Chainlink and Ethena in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ethena and Chainlink 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 Chainlink are associated (or correlated) with Ethena. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ethena has no effect on the direction of Chainlink i.e., Chainlink and Ethena go up and down completely randomly.
Pair Corralation between Chainlink and Ethena
Assuming the 90 days trading horizon Chainlink is expected to generate 0.66 times more return on investment than Ethena. However, Chainlink is 1.52 times less risky than Ethena. It trades about 0.07 of its potential returns per unit of risk. Ethena is currently generating about -0.01 per unit of risk. If you would invest 2,541 in Chainlink on October 24, 2024 and sell it today you would earn a total of 137.00 from holding Chainlink or generate 5.39% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Chainlink vs. Ethena
Performance |
| Timeline |
| Chainlink |
| Ethena |
Chainlink and Ethena Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Chainlink and Ethena
The main advantage of trading using opposite Chainlink and Ethena positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chainlink position performs unexpectedly, Ethena 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 Ethena will offset losses from the drop in Ethena's long position.The idea behind Chainlink and Ethena 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 CEOs Directory module to screen CEOs from public companies around the world.
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