Correlation Between EigenLayer and Magic
Can any of the company-specific risk be diversified away by investing in both EigenLayer and Magic 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 Magic into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between EigenLayer and Magic, you can compare the effects of market volatilities on EigenLayer and Magic 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 Magic. Check out your portfolio center. Please also check ongoing floating volatility patterns of EigenLayer and Magic.
Diversification Opportunities for EigenLayer and Magic
0.36 | Correlation Coefficient |
Weak diversification
The 3 months correlation between EigenLayer and Magic is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding EigenLayer and Magic in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Magic 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 Magic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Magic has no effect on the direction of EigenLayer i.e., EigenLayer and Magic go up and down completely randomly.
Pair Corralation between EigenLayer and Magic
Assuming the 90 days trading horizon EigenLayer is expected to generate 22.94 times more return on investment than Magic. However, EigenLayer is 22.94 times more volatile than Magic. It trades about 0.12 of its potential returns per unit of risk. Magic is currently generating about 0.2 per unit of risk. If you would invest 0.00 in EigenLayer on September 2, 2024 and sell it today you would earn a total of 363.00 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 | 100.0% |
| Values | Daily Returns |
EigenLayer vs. Magic
Performance |
| Timeline |
| EigenLayer |
| Magic |
EigenLayer and Magic Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with EigenLayer and Magic
The main advantage of trading using opposite EigenLayer and Magic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if EigenLayer position performs unexpectedly, Magic 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 Magic will offset losses from the drop in Magic's long position.The idea behind EigenLayer and Magic 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
Other Complementary Tools
| Portfolio Suggestion Get suggestions outside of your existing asset allocation including your own model portfolios | |
| Stock Tickers Use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites | |
| FinTech Suite Use AI to screen and filter profitable investment opportunities | |
| Portfolio Center All portfolio management and optimization tools to improve performance of your portfolios | |
| ETF Categories List of ETF categories grouped based on various criteria, such as the investment strategy or type of investments |