Correlation Between EigenLayer and BFT
Can any of the company-specific risk be diversified away by investing in both EigenLayer and BFT 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 EigenLayer and BFT into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between EigenLayer and BFT, you can compare the effects of market volatilities on EigenLayer and BFT 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 EigenLayer with a short position of BFT. Check out your portfolio center. Please also check ongoing floating volatility patterns of EigenLayer and BFT.
Diversification Opportunities for EigenLayer and BFT
0.31 | Correlation Coefficient |
Weak diversification
The 3 months correlation between EigenLayer and BFT is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding EigenLayer and BFT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BFT and EigenLayer 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 EigenLayer are associated (or correlated) with BFT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BFT has no effect on the direction of EigenLayer i.e., EigenLayer and BFT go up and down completely randomly.
Pair Corralation between EigenLayer and BFT
Assuming the 90 days trading horizon EigenLayer is expected to generate 10.52 times more return on investment than BFT. However, EigenLayer is 10.52 times more volatile than BFT. It trades about 0.07 of its potential returns per unit of risk. BFT is currently generating about 0.01 per unit of risk. If you would invest 0.00 in EigenLayer on August 28, 2024 and sell it today you would earn a total of 314.00 from holding EigenLayer or generate 9.223372036854776E16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 63.26% |
| Values | Daily Returns |
EigenLayer vs. BFT
Performance |
| Timeline |
| EigenLayer |
| BFT |
EigenLayer and BFT Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with EigenLayer and BFT
The main advantage of trading using opposite EigenLayer and BFT positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if EigenLayer position performs unexpectedly, BFT 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 BFT will offset losses from the drop in BFT's long position.The idea behind EigenLayer and BFT 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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