Correlation Between LayerZero and Bifrost

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

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

Diversification Opportunities for LayerZero and Bifrost

-0.71

Correlation Coefficient

LayerZero  Bifrost

Pay attention - limited upside

The 3 months correlation between LayerZero and Bifrost is -0.71. Overlapping area represents the amount of risk that can be diversified away by holding LayerZero and Bifrost in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bifrost and LayerZero 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 LayerZero are associated (or correlated) with Bifrost. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bifrost has no effect on the direction of LayerZero i.e., LayerZero and Bifrost go up and down completely randomly.

Pair Corralation between LayerZero and Bifrost

Assuming the 90 days trading horizon LayerZero is expected to under-perform the Bifrost. In addition to that, LayerZero is 1.31 times more volatile than Bifrost. It trades about -0.07 of its total potential returns per unit of risk. Bifrost is currently generating about 0.17 per unit of volatility. If you would invest  3.13  in Bifrost on April 24, 2025 and sell it today you would earn a total of  1.53  from holding Bifrost or generate 48.88% return on investment over 90 days.

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

LayerZero  vs.  Bifrost

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 unsteady performance in the last few months, the Crypto's basic indicators remain rather sound which may send shares a bit higher in August 2025. The latest tumult may also be a sign of longer-term up-swing for LayerZero shareholders.

Bifrost

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Bifrost are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady fundamental indicators, Bifrost exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with LayerZero and Bifrost

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

The idea behind LayerZero and Bifrost 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 Commodity Directory module to find actively traded commodities issued by global exchanges.