Correlation Between Chainlink and NEBL

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

By analyzing existing cross correlation between Chainlink and NEBL, you can compare the effects of market volatilities on Chainlink and NEBL 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 NEBL. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chainlink and NEBL.

Diversification Opportunities for Chainlink and NEBL

0.35

Correlation Coefficient

Chainlink  NEBL

Weak diversification

The 3 months correlation between Chainlink and NEBL is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Chainlink and NEBL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NEBL 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 NEBL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NEBL has no effect on the direction of Chainlink i.e., Chainlink and NEBL go up and down completely randomly.

Pair Corralation between Chainlink and NEBL

Assuming the 90 days trading horizon Chainlink is expected to generate 15.19 times less return on investment than NEBL. But when comparing it to its historical volatility, Chainlink is 21.15 times less risky than NEBL. It trades about 0.2 of its potential returns per unit of risk. NEBL is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  0.25  in NEBL on September 12, 2024 and sell it today you would earn a total of  17.75  from holding NEBL or generate 7131.82% return on investment over 90 days.

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

Chainlink  vs.  NEBL

Chainlink

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Chainlink are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady fundamental indicators, Chainlink exhibited solid returns over the last few months and may actually be approaching a breakup point.

NEBL

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in NEBL are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady fundamental indicators, NEBL exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Chainlink and NEBL

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

The idea behind Chainlink and NEBL 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.