Correlation Between EigenLayer and Litecoin

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

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

Diversification Opportunities for EigenLayer and Litecoin

-0.11

Correlation Coefficient

EigenLayer  Litecoin

Good diversification

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

Pair Corralation between EigenLayer and Litecoin

Assuming the 90 days trading horizon EigenLayer is expected to under-perform the Litecoin. In addition to that, EigenLayer is 1.35 times more volatile than Litecoin. It trades about -0.12 of its total potential returns per unit of risk. Litecoin is currently generating about 0.02 per unit of volatility. If you would invest  13,095  in Litecoin on December 2, 2024 and sell it today you would lose (667.00) from holding Litecoin or give up 5.09% of portfolio value over 90 days.

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

EigenLayer  vs.  Litecoin

EigenLayer

Risk-Adjusted Performance

Very Weak

Over the last 90 days EigenLayer 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 April 2025. The latest tumult may also be a sign of longer-term up-swing for EigenLayer shareholders.

Litecoin

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Litecoin are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady fundamental indicators, Litecoin may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with EigenLayer and Litecoin

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

The idea behind EigenLayer and Litecoin 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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.