Correlation Between Chainlink and LEO Token
Can any of the company-specific risk be diversified away by investing in both Chainlink and LEO Token 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 LEO Token into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Chainlink and LEO Token, you can compare the effects of market volatilities on Chainlink and LEO Token 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 LEO Token. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chainlink and LEO Token.
Diversification Opportunities for Chainlink and LEO Token
Almost no diversification
The 3 months correlation between Chainlink and LEO is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Chainlink and LEO Token in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LEO Token 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 LEO Token. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LEO Token has no effect on the direction of Chainlink i.e., Chainlink and LEO Token go up and down completely randomly.
Pair Corralation between Chainlink and LEO Token
Assuming the 90 days trading horizon Chainlink is expected to generate 1.62 times more return on investment than LEO Token. However, Chainlink is 1.62 times more volatile than LEO Token. It trades about 0.29 of its potential returns per unit of risk. LEO Token is currently generating about 0.32 per unit of risk. If you would invest 1,102 in Chainlink on August 30, 2024 and sell it today you would earn a total of 751.00 from holding Chainlink or generate 68.15% 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. LEO Token
Performance |
| Timeline |
| Chainlink |
| LEO Token |
Chainlink and LEO Token Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Chainlink and LEO Token
The main advantage of trading using opposite Chainlink and LEO Token positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chainlink position performs unexpectedly, LEO Token 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 LEO Token will offset losses from the drop in LEO Token's long position.The idea behind Chainlink and LEO Token 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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