Correlation Between Chainlink and Graph
Can any of the company-specific risk be diversified away by investing in both Chainlink and Graph 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 Graph into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Chainlink and The Graph, you can compare the effects of market volatilities on Chainlink and Graph 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 Graph. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chainlink and Graph.
Diversification Opportunities for Chainlink and Graph
Almost no diversification
The 3 months correlation between Chainlink and Graph is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Chainlink and The Graph in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Graph 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 Graph. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Graph has no effect on the direction of Chainlink i.e., Chainlink and Graph go up and down completely randomly.
Pair Corralation between Chainlink and Graph
Assuming the 90 days trading horizon Chainlink is expected to generate 1.78 times less return on investment than Graph. But when comparing it to its historical volatility, Chainlink is 1.56 times less risky than Graph. It trades about 0.07 of its potential returns per unit of risk. The Graph is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 6.17 in The Graph on August 27, 2024 and sell it today you would earn a total of 17.83 from holding The Graph or generate 288.98% 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. The Graph
Performance |
| Timeline |
| Chainlink |
| Graph |
Chainlink and Graph Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Chainlink and Graph
The main advantage of trading using opposite Chainlink and Graph positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chainlink position performs unexpectedly, Graph 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 Graph will offset losses from the drop in Graph's long position.The idea behind Chainlink and The Graph 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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
Other Complementary Tools
| Portfolio Center All portfolio management and optimization tools to improve performance of your portfolios | |
| Portfolio Anywhere Track or share privately all of your investments from the convenience of any device | |
| Price Transformation Use Price Transformation models to analyze the depth of different equity instruments across global markets | |
| Idea Breakdown Analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes | |
| Equity Forecasting Use basic forecasting models to generate price predictions and determine price momentum |