Correlation Between Grayscale Stellar and Grayscale Chainlink

Can any of the company-specific risk be diversified away by investing in both Grayscale Stellar and Grayscale Chainlink 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 Grayscale Stellar and Grayscale Chainlink into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Grayscale Stellar Lumens and Grayscale Chainlink Trust, you can compare the effects of market volatilities on Grayscale Stellar and Grayscale Chainlink 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 Grayscale Stellar with a short position of Grayscale Chainlink. Check out your portfolio center. Please also check ongoing floating volatility patterns of Grayscale Stellar and Grayscale Chainlink.

Diversification Opportunities for Grayscale Stellar and Grayscale Chainlink

0.79

Correlation Coefficient

Grayscale Stellar  Grayscale Chainlink

Poor diversification

The 3 months correlation between Grayscale and Grayscale is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Grayscale Stellar Lumens and Grayscale Chainlink Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Grayscale Chainlink Trust and Grayscale Stellar 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 Grayscale Stellar Lumens are associated (or correlated) with Grayscale Chainlink. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Grayscale Chainlink Trust has no effect on the direction of Grayscale Stellar i.e., Grayscale Stellar and Grayscale Chainlink go up and down completely randomly.

Pair Corralation between Grayscale Stellar and Grayscale Chainlink

Given the investment horizon of 90 days Grayscale Stellar Lumens is expected to generate 0.74 times more return on investment than Grayscale Chainlink. However, Grayscale Stellar Lumens is 1.36 times less risky than Grayscale Chainlink. It trades about -0.02 of its potential returns per unit of risk. Grayscale Chainlink Trust is currently generating about -0.13 per unit of risk. If you would invest  4,225  in Grayscale Stellar Lumens on December 22, 2024 and sell it today you would lose (930.00) from holding Grayscale Stellar Lumens or give up 22.01% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Grayscale Stellar Lumens  vs.  Grayscale Chainlink Trust

Grayscale Stellar Lumens

Risk-Adjusted Performance

Very Weak

Over the last 90 days Grayscale Stellar Lumens has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest inconsistent performance, the Stock's essential indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Grayscale Chainlink Trust

Risk-Adjusted Performance

Very Weak

Over the last 90 days Grayscale Chainlink Trust has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain quite persistent which may send shares a bit higher in April 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with Grayscale Stellar and Grayscale Chainlink

The main advantage of trading using opposite Grayscale Stellar and Grayscale Chainlink positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Grayscale Stellar position performs unexpectedly, Grayscale Chainlink 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 Grayscale Chainlink will offset losses from the drop in Grayscale Chainlink's long position.

The idea behind Grayscale Stellar Lumens and Grayscale Chainlink Trust 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.

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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 Equity Valuation module to check real value of public entities based on technical and fundamental data.