Correlation Between SWRV and EigenLayer

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

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

Diversification Opportunities for SWRV and EigenLayer

0.46

Correlation Coefficient

SWRV  EigenLayer

Very weak diversification

The 3 months correlation between SWRV and EigenLayer is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding SWRV and EigenLayer in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EigenLayer and SWRV 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 SWRV 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 SWRV i.e., SWRV and EigenLayer go up and down completely randomly.

Pair Corralation between SWRV and EigenLayer

Assuming the 90 days trading horizon SWRV is expected to generate 1.21 times less return on investment than EigenLayer. In addition to that, SWRV is 1.2 times more volatile than EigenLayer. It trades about 0.08 of its total potential returns per unit of risk. EigenLayer is currently generating about 0.12 per unit of volatility. 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	Weak
Accuracy	100.0%
Values	Daily Returns

SWRV  vs.  EigenLayer

SWRV

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in SWRV are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady fundamental indicators, SWRV 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 SWRV and EigenLayer

The main advantage of trading using opposite SWRV and EigenLayer positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SWRV 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 SWRV 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.