Correlation Between EigenLayer and DERO

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

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

Diversification Opportunities for EigenLayer and DERO

-0.23

Correlation Coefficient

EigenLayer  DERO

Very good diversification

The 3 months correlation between EigenLayer and DERO is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding EigenLayer and DERO in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DERO 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 DERO. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DERO has no effect on the direction of EigenLayer i.e., EigenLayer and DERO go up and down completely randomly.

Pair Corralation between EigenLayer and DERO

Assuming the 90 days trading horizon EigenLayer is expected to generate 1.4 times more return on investment than DERO. However, EigenLayer is 1.4 times more volatile than DERO. It trades about 0.03 of its potential returns per unit of risk. DERO is currently generating about -0.08 per unit of risk. If you would invest  284.00  in EigenLayer on October 26, 2024 and sell it today you would lose (12.00) from holding EigenLayer or give up 4.23% of portfolio value over 90 days.

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

EigenLayer  vs.  DERO

EigenLayer

Risk-Adjusted Performance

2 of 100

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.

DERO

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days DERO 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 fundamental indicators remain rather sound which may send shares a bit higher in February 2025. The latest tumult may also be a sign of longer-term up-swing for DERO shareholders.

Pair Trading with EigenLayer and DERO

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

The idea behind EigenLayer and DERO 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..