Correlation Between EigenLayer and LUNC

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

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

Diversification Opportunities for EigenLayer and LUNC

0.78

Correlation Coefficient

EigenLayer  LUNC

Poor diversification

The 3 months correlation between EigenLayer and LUNC is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding EigenLayer and LUNC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LUNC 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 LUNC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LUNC has no effect on the direction of EigenLayer i.e., EigenLayer and LUNC go up and down completely randomly.

Pair Corralation between EigenLayer and LUNC

Assuming the 90 days trading horizon EigenLayer is expected to generate 4.84 times more return on investment than LUNC. However, EigenLayer is 4.84 times more volatile than LUNC. It trades about 0.03 of its potential returns per unit of risk. LUNC is currently generating about 0.01 per unit of risk. If you would invest  284.00  in EigenLayer on November 19, 2024 and sell it today you would lose (122.00) from holding EigenLayer or give up 42.96% of portfolio value over 90 days.

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

EigenLayer  vs.  LUNC

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 rather sound fundamental indicators, EigenLayer is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

LUNC

Risk-Adjusted Performance

Very Weak

Over the last 90 days LUNC has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Crypto's fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for LUNC shareholders.

Pair Trading with EigenLayer and LUNC

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

The idea behind EigenLayer and LUNC 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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.