Correlation Between FTC and EigenLayer

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

Diversification Opportunities for FTC and EigenLayer

0.69
  Correlation Coefficient

Poor diversification

The 3 months correlation between FTC and EigenLayer is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding FTC and EigenLayer in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EigenLayer and FTC 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 FTC 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 FTC i.e., FTC and EigenLayer go up and down completely randomly.

Pair Corralation between FTC and EigenLayer

Assuming the 90 days trading horizon FTC is expected to generate 3.24 times less return on investment than EigenLayer. But when comparing it to its historical volatility, FTC is 5.54 times less risky than EigenLayer. It trades about 0.21 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 Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

FTC  vs.  EigenLayer

 Performance 
       Timeline  
FTC 

Risk-Adjusted Performance

Solid

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in FTC are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady fundamental indicators, FTC exhibited solid returns over the last few months and may actually be approaching a breakup point.
EigenLayer 

Risk-Adjusted Performance

OK

 
Weak
 
Strong
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.

FTC and EigenLayer Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with FTC and EigenLayer

The main advantage of trading using opposite FTC and EigenLayer positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FTC 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 FTC 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.

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