Correlation Between Chainlink and NEO
Can any of the company-specific risk be diversified away by investing in both Chainlink and NEO 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 NEO into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Chainlink and NEO, you can compare the effects of market volatilities on Chainlink and NEO 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 NEO. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chainlink and NEO.
Diversification Opportunities for Chainlink and NEO
Average diversification
The 3 months correlation between Chainlink and NEO is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding Chainlink and NEO in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NEO 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 NEO. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NEO has no effect on the direction of Chainlink i.e., Chainlink and NEO go up and down completely randomly.
Pair Corralation between Chainlink and NEO
Assuming the 90 days trading horizon Chainlink is expected to generate 0.97 times more return on investment than NEO. However, Chainlink is 1.03 times less risky than NEO. It trades about 0.03 of its potential returns per unit of risk. NEO is currently generating about 0.03 per unit of risk. If you would invest 1,097 in Chainlink on January 19, 2024 and sell it today you would earn a total of 209.00 from holding Chainlink or generate 19.05% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Chainlink vs. NEO
Performance |
| Timeline |
| Chainlink |
| NEO |
Chainlink and NEO Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Chainlink and NEO
The main advantage of trading using opposite Chainlink and NEO positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chainlink position performs unexpectedly, NEO 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 NEO will offset losses from the drop in NEO's long position.The idea behind Chainlink and NEO 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
Other Complementary Tools
| Aroon Oscillator Analyze current equity momentum using Aroon Oscillator and other momentum ratios | |
| Global Correlations Find global opportunities by holding instruments from different markets | |
| Equity Search Search for actively traded equities including funds and ETFs from over 30 global markets | |
| Companies Directory Evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals | |
| My Watchlist Analysis Analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like | |
| AI Investment Finder Use AI to screen and filter profitable investment opportunities | |
| Portfolio Comparator Compare the composition, asset allocations and performance of any two portfolios in your account | |
| Portfolio Diagnostics Use generated alerts and portfolio events aggregator to diagnose current holdings | |
| Latest Portfolios Quick portfolio dashboard that showcases your latest portfolios |