Correlation Between Kava and EigenLayer

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Can any of the company-specific risk be diversified away by investing in both Kava 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 Kava and EigenLayer into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Kava and EigenLayer, you can compare the effects of market volatilities on Kava 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 Kava with a short position of EigenLayer. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kava and EigenLayer.

Diversification Opportunities for Kava and EigenLayer

KavaEigenLayerDiversified AwayKavaEigenLayerDiversified Away100%
0.51
  Correlation Coefficient

Very weak diversification

The 3 months correlation between Kava and EigenLayer is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Kava and EigenLayer in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EigenLayer and Kava 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 Kava 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 Kava i.e., Kava and EigenLayer go up and down completely randomly.

Pair Corralation between Kava and EigenLayer

Assuming the 90 days trading horizon Kava is expected to generate 0.49 times more return on investment than EigenLayer. However, Kava is 2.06 times less risky than EigenLayer. It trades about -0.07 of its potential returns per unit of risk. EigenLayer is currently generating about -0.12 per unit of risk. If you would invest  46.00  in Kava on November 23, 2024 and sell it today you would lose (4.00) from holding Kava or give up 8.7% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

Kava  vs.  EigenLayer

 Performance 
JavaScript chart by amCharts 3.21.15Dec2025Feb -40-20020406080100
JavaScript chart by amCharts 3.21.15KAVA EIGEN
       Timeline  
Kava 

Risk-Adjusted Performance

Very Weak

 
Weak
 
Strong
Over the last 90 days Kava has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound fundamental indicators, Kava is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb0.40.450.50.550.60.650.70.75
EigenLayer 

Risk-Adjusted Performance

Very Weak

 
Weak
 
Strong
Over the last 90 days EigenLayer has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Crypto's fundamental indicators remain rather sound which may send shares a bit higher in March 2025. The latest tumult may also be a sign of longer-term up-swing for EigenLayer shareholders.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb1.522.533.544.555.5

Kava and EigenLayer Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-19.83-14.85-9.87-4.9-0.074.899.9515.0120.0625.12 0.0050.0060.0070.0080.0090.010
JavaScript chart by amCharts 3.21.15KAVA EIGEN
       Returns  

Pair Trading with Kava and EigenLayer

The main advantage of trading using opposite Kava and EigenLayer positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kava 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 Kava 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.

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