Correlation Between Chainlink and Power Ledger
Can any of the company-specific risk be diversified away by investing in both Chainlink and Power Ledger 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 Power Ledger into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Chainlink and Power Ledger, you can compare the effects of market volatilities on Chainlink and Power Ledger 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 Power Ledger. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chainlink and Power Ledger.
Diversification Opportunities for Chainlink and Power Ledger
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Chainlink and Power is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Chainlink and Power Ledger in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Power Ledger 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 Power Ledger. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Power Ledger has no effect on the direction of Chainlink i.e., Chainlink and Power Ledger go up and down completely randomly.
Pair Corralation between Chainlink and Power Ledger
Assuming the 90 days trading horizon Chainlink is expected to under-perform the Power Ledger. But the crypto coin apears to be less risky and, when comparing its historical volatility, Chainlink is 1.53 times less risky than Power Ledger. The crypto coin trades about -0.12 of its potential returns per unit of risk. The Power Ledger is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest 37.00 in Power Ledger on January 20, 2024 and sell it today you would lose (8.00) from holding Power Ledger or give up 21.62% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 97.78% |
| Values | Daily Returns |
Chainlink vs. Power Ledger
Performance |
| Timeline |
| Chainlink |
| Power Ledger |
Chainlink and Power Ledger Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Chainlink and Power Ledger
The main advantage of trading using opposite Chainlink and Power Ledger positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chainlink position performs unexpectedly, Power Ledger 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 Power Ledger will offset losses from the drop in Power Ledger's long position.The idea behind Chainlink and Power Ledger 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.| Power Ledger vs. Solana | Power Ledger vs. XRP | Power Ledger vs. The Open Network | Power Ledger vs. Staked Ether |
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 Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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