Correlation Between EigenLayer and NMC

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

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

Diversification Opportunities for EigenLayer and NMC

-0.4

Correlation Coefficient

EigenLayer  NMC

Very good diversification

The 3 months correlation between EigenLayer and NMC is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding EigenLayer and NMC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NMC 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 NMC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NMC has no effect on the direction of EigenLayer i.e., EigenLayer and NMC go up and down completely randomly.

Pair Corralation between EigenLayer and NMC

Assuming the 90 days trading horizon EigenLayer is expected to under-perform the NMC. In addition to that, EigenLayer is 3.01 times more volatile than NMC. It trades about -0.22 of its total potential returns per unit of risk. NMC is currently generating about 0.01 per unit of volatility. If you would invest  98.00  in NMC on December 22, 2024 and sell it today you would earn a total of  0.00  from holding NMC or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.46%
Values	Daily Returns

EigenLayer  vs.  NMC

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.

NMC

Risk-Adjusted Performance

Weak

Over the last 90 days NMC has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound fundamental indicators, NMC is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with EigenLayer and NMC

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

The idea behind EigenLayer and NMC 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.