Correlation Between EigenLayer and LayerZero

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

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

Diversification Opportunities for EigenLayer and LayerZero

0.11

Correlation Coefficient

EigenLayer  LayerZero

Average diversification

The 3 months correlation between EigenLayer and LayerZero is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding EigenLayer and LayerZero in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LayerZero 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 LayerZero. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LayerZero has no effect on the direction of EigenLayer i.e., EigenLayer and LayerZero go up and down completely randomly.

Pair Corralation between EigenLayer and LayerZero

Assuming the 90 days trading horizon EigenLayer is expected to generate 1.85 times more return on investment than LayerZero. However, EigenLayer is 1.85 times more volatile than LayerZero. It trades about 0.12 of its potential returns per unit of risk. LayerZero is currently generating about -0.03 per unit of risk. 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	Insignificant
Accuracy	100.0%
Values	Daily Returns

EigenLayer  vs.  LayerZero

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.

LayerZero

Risk-Adjusted Performance

Very Weak

Over the last 90 days LayerZero has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Crypto's basic indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for LayerZero shareholders.

Pair Trading with EigenLayer and LayerZero

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

The idea behind EigenLayer and LayerZero 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.

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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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.