Correlation Between EigenLayer and Optimism
Can any of the company-specific risk be diversified away by investing in both EigenLayer and Optimism 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 Optimism into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between EigenLayer and Optimism, you can compare the effects of market volatilities on EigenLayer and Optimism 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 Optimism. Check out your portfolio center. Please also check ongoing floating volatility patterns of EigenLayer and Optimism.
Diversification Opportunities for EigenLayer and Optimism
0.34 | Correlation Coefficient |
Weak diversification
The 3 months correlation between EigenLayer and Optimism is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding EigenLayer and Optimism in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Optimism 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 Optimism. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Optimism has no effect on the direction of EigenLayer i.e., EigenLayer and Optimism go up and down completely randomly.
Pair Corralation between EigenLayer and Optimism
Assuming the 90 days trading horizon EigenLayer is expected to generate 31.32 times less return on investment than Optimism. In addition to that, EigenLayer is 1.1 times more volatile than Optimism. It trades about 0.01 of its total potential returns per unit of risk. Optimism is currently generating about 0.24 per unit of volatility. If you would invest 156.00 in Optimism on August 26, 2024 and sell it today you would earn a total of 65.00 from holding Optimism or generate 41.67% 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. Optimism
Performance |
| Timeline |
| EigenLayer |
| Optimism |
EigenLayer and Optimism Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with EigenLayer and Optimism
The main advantage of trading using opposite EigenLayer and Optimism positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if EigenLayer position performs unexpectedly, Optimism 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 Optimism will offset losses from the drop in Optimism's long position.The idea behind EigenLayer and Optimism 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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