Correlation Between Magic Eden and EigenLayer

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

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

Diversification Opportunities for Magic Eden and EigenLayer

0.32

Correlation Coefficient

Magic Eden  EigenLayer

Weak diversification

The 3 months correlation between Magic and EigenLayer is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Magic Eden and EigenLayer in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EigenLayer and Magic Eden 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 Magic Eden 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 Magic Eden i.e., Magic Eden and EigenLayer go up and down completely randomly.

Pair Corralation between Magic Eden and EigenLayer

Assuming the 90 days horizon Magic Eden is expected to generate 14.32 times more return on investment than EigenLayer. However, Magic Eden is 14.32 times more volatile than EigenLayer. It trades about 0.12 of its potential returns per unit of risk. EigenLayer is currently generating about 0.03 per unit of risk. If you would invest  0.06  in Magic Eden on October 9, 2024 and sell it today you would earn a total of  301.94  from holding Magic Eden or generate 500729.19% return on investment over 90 days.

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

Magic Eden  vs.  EigenLayer

Magic Eden

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Magic Eden are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady fundamental indicators, Magic Eden exhibited solid returns over the last few months and may actually be approaching a breakup point.

EigenLayer

Risk-Adjusted Performance

2 of 100

Insignificant

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.

Pair Trading with Magic Eden and EigenLayer

The main advantage of trading using opposite Magic Eden and EigenLayer positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Magic Eden 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 Magic Eden 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.