Correlation Between EigenLayer and APL

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

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

Diversification Opportunities for EigenLayer and APL

-0.54

Correlation Coefficient

EigenLayer  APL

Excellent diversification

The 3 months correlation between EigenLayer and APL is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding EigenLayer and APL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on APL 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 APL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of APL has no effect on the direction of EigenLayer i.e., EigenLayer and APL go up and down completely randomly.

Pair Corralation between EigenLayer and APL

Assuming the 90 days trading horizon EigenLayer is expected to generate 1.84 times less return on investment than APL. But when comparing it to its historical volatility, EigenLayer is 1.17 times less risky than APL. It trades about 0.03 of its potential returns per unit of risk. APL is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  0.02  in APL on March 24, 2025 and sell it today you would lose (0.01) from holding APL or give up 40.0% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	91.63%
Values	Daily Returns

EigenLayer  vs.  APL

EigenLayer

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in EigenLayer are ranked lower than 2 (%) 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.

APL

Risk-Adjusted Performance

Solid

Over the last 90 days APL has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather unsteady essential indicators, APL exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with EigenLayer and APL

The main advantage of trading using opposite EigenLayer and APL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if EigenLayer position performs unexpectedly, APL 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 APL will offset losses from the drop in APL's long position.

The idea behind EigenLayer and APL 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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.