Correlation Between CHESS and EigenLayer

Can any of the company-specific risk be diversified away by investing in both CHESS 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 CHESS and EigenLayer into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between CHESS and EigenLayer, you can compare the effects of market volatilities on CHESS 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 CHESS with a short position of EigenLayer. Check out your portfolio center. Please also check ongoing floating volatility patterns of CHESS and EigenLayer.

Diversification Opportunities for CHESS and EigenLayer

0.24

Correlation Coefficient

CHESS  EigenLayer

Modest diversification

The 3 months correlation between CHESS and EigenLayer is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding CHESS and EigenLayer in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EigenLayer and CHESS 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 CHESS 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 CHESS i.e., CHESS and EigenLayer go up and down completely randomly.

Pair Corralation between CHESS and EigenLayer

Assuming the 90 days trading horizon CHESS is expected to generate 1.45 times less return on investment than EigenLayer. But when comparing it to its historical volatility, CHESS is 1.08 times less risky than EigenLayer. It trades about 0.09 of its potential returns per unit of risk. EigenLayer is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  95.00  in EigenLayer on April 22, 2025 and sell it today you would earn a total of  60.00  from holding EigenLayer or generate 63.16% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

CHESS  vs.  EigenLayer

CHESS

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in CHESS are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady fundamental indicators, CHESS exhibited solid returns over the last few months and may actually be approaching a breakup point.

EigenLayer

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in EigenLayer are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady fundamental indicators, EigenLayer exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with CHESS and EigenLayer

The main advantage of trading using opposite CHESS and EigenLayer positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CHESS 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 CHESS 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.