Correlation Between EigenLayer and LCX
Can any of the company-specific risk be diversified away by investing in both EigenLayer and LCX 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 LCX into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between EigenLayer and LCX, you can compare the effects of market volatilities on EigenLayer and LCX 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 LCX. Check out your portfolio center. Please also check ongoing floating volatility patterns of EigenLayer and LCX.
Diversification Opportunities for EigenLayer and LCX
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between EigenLayer and LCX is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding EigenLayer and LCX in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LCX 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 LCX. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LCX has no effect on the direction of EigenLayer i.e., EigenLayer and LCX go up and down completely randomly.
Pair Corralation between EigenLayer and LCX
Assuming the 90 days trading horizon EigenLayer is expected to under-perform the LCX. But the crypto coin apears to be less risky and, when comparing its historical volatility, EigenLayer is 1.28 times less risky than LCX. The crypto coin trades about -0.03 of its potential returns per unit of risk. The LCX is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 11.00 in LCX on November 27, 2024 and sell it today you would earn a total of 13.00 from holding LCX or generate 118.18% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
EigenLayer vs. LCX
Performance |
| Timeline |
| EigenLayer |
| LCX |
EigenLayer and LCX Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with EigenLayer and LCX
The main advantage of trading using opposite EigenLayer and LCX positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if EigenLayer position performs unexpectedly, LCX 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 LCX will offset losses from the drop in LCX's long position.The idea behind EigenLayer and LCX 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
Other Complementary Tools
| Portfolio File Import Quickly import all of your third-party portfolios from your local drive in csv format | |
| Odds Of Bankruptcy Get analysis of equity chance of financial distress in the next 2 years | |
| Efficient Frontier Plot and analyze your portfolio and positions against risk-return landscape of the market. | |
| Portfolio Center All portfolio management and optimization tools to improve performance of your portfolios | |
| Equity Analysis Research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities |