Correlation Between SPACE and EigenLayer

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

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

Diversification Opportunities for SPACE and EigenLayer

0.6

Correlation Coefficient

SPACE  EigenLayer

Poor diversification

The 3 months correlation between SPACE and EigenLayer is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding SPACE and EigenLayer in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EigenLayer and SPACE 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 SPACE are associated (or correlated) with EigenLayer. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EigenLayer has no effect on the direction of SPACE i.e., SPACE and EigenLayer go up and down completely randomly.

Pair Corralation between SPACE and EigenLayer

Assuming the 90 days horizon SPACE is expected to generate 0.66 times more return on investment than EigenLayer. However, SPACE is 1.52 times less risky than EigenLayer. It trades about -0.15 of its potential returns per unit of risk. EigenLayer is currently generating about -0.22 per unit of risk. If you would invest  46.00  in SPACE on October 25, 2024 and sell it today you would lose (7.00) from holding SPACE or give up 15.22% of portfolio value over 90 days.

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

SPACE  vs.  EigenLayer

SPACE

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in SPACE are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady fundamental indicators, SPACE may actually be approaching a critical reversion point that can send shares even higher in February 2025.

EigenLayer

Risk-Adjusted Performance

1 of 100

Weak

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

Pair Trading with SPACE and EigenLayer

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

The idea behind SPACE and EigenLayer 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.

Check out your portfolio center.

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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .