Correlation Between EigenLayer and Safe
Can any of the company-specific risk be diversified away by investing in both EigenLayer and Safe 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 Safe into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between EigenLayer and Safe, you can compare the effects of market volatilities on EigenLayer and Safe 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 Safe. Check out your portfolio center. Please also check ongoing floating volatility patterns of EigenLayer and Safe.
Diversification Opportunities for EigenLayer and Safe
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between EigenLayer and Safe is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding EigenLayer and Safe in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Safe 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 Safe. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Safe has no effect on the direction of EigenLayer i.e., EigenLayer and Safe go up and down completely randomly.
Pair Corralation between EigenLayer and Safe
Assuming the 90 days trading horizon EigenLayer is expected to generate 1.71 times more return on investment than Safe. However, EigenLayer is 1.71 times more volatile than Safe. It trades about 0.09 of its potential returns per unit of risk. Safe is currently generating about -0.07 per unit of risk. If you would invest 284.00 in EigenLayer on August 28, 2024 and sell it today you would earn a total of 30.00 from holding EigenLayer or generate 10.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
EigenLayer vs. Safe
Performance |
| Timeline |
| EigenLayer |
| Safe |
EigenLayer and Safe Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with EigenLayer and Safe
The main advantage of trading using opposite EigenLayer and Safe positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if EigenLayer position performs unexpectedly, Safe 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 Safe will offset losses from the drop in Safe's long position.The idea behind EigenLayer and Safe 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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.
Other Complementary Tools
| Equity Forecasting Use basic forecasting models to generate price predictions and determine price momentum | |
| Portfolio Comparator Compare the composition, asset allocations and performance of any two portfolios in your account | |
| Portfolio Anywhere Track or share privately all of your investments from the convenience of any device | |
| Bollinger Bands Use Bollinger Bands indicator to analyze target price for a given investing horizon | |
| Portfolio Backtesting Avoid under-diversification and over-optimization by backtesting your portfolios |