Correlation Between JAR and EigenLayer
Can any of the company-specific risk be diversified away by investing in both JAR and EigenLayer 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 JAR and EigenLayer into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between JAR and EigenLayer, you can compare the effects of market volatilities on JAR and EigenLayer 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 JAR with a short position of EigenLayer. Check out your portfolio center. Please also check ongoing floating volatility patterns of JAR and EigenLayer.
Diversification Opportunities for JAR and EigenLayer
0.23 | Correlation Coefficient |
Modest diversification
The 3 months correlation between JAR and EigenLayer is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding JAR and EigenLayer in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EigenLayer and JAR 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 JAR are associated (or correlated) with EigenLayer. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EigenLayer has no effect on the direction of JAR i.e., JAR and EigenLayer go up and down completely randomly.
Pair Corralation between JAR and EigenLayer
Assuming the 90 days trading horizon JAR is expected to generate 30.42 times less return on investment than EigenLayer. But when comparing it to its historical volatility, JAR is 6.95 times less risky than EigenLayer. It trades about 0.01 of its potential returns per unit of risk. EigenLayer is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 284.00 in EigenLayer on November 9, 2024 and sell it today you would lose (113.00) from holding EigenLayer or give up 39.79% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
JAR vs. EigenLayer
Performance |
| Timeline |
| JAR |
| EigenLayer |
JAR and EigenLayer Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with JAR and EigenLayer
The main advantage of trading using opposite JAR and EigenLayer positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if JAR position performs unexpectedly, EigenLayer 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 EigenLayer will offset losses from the drop in EigenLayer's long position.The idea behind JAR and EigenLayer 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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