Correlation Between EigenLayer and BMX

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

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

Diversification Opportunities for EigenLayer and BMX

-0.52

Correlation Coefficient

EigenLayer  BMX

Excellent diversification

The 3 months correlation between EigenLayer and BMX is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding EigenLayer and BMX in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BMX 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 BMX. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BMX has no effect on the direction of EigenLayer i.e., EigenLayer and BMX go up and down completely randomly.

Pair Corralation between EigenLayer and BMX

Assuming the 90 days trading horizon EigenLayer is expected to generate 18.83 times more return on investment than BMX. However, EigenLayer is 18.83 times more volatile than BMX. It trades about 0.13 of its potential returns per unit of risk. BMX is currently generating about -0.01 per unit of risk. If you would invest  0.00  in EigenLayer on August 30, 2024 and sell it today you would earn a total of  389.00  from holding EigenLayer or generate 9.223372036854776E16% 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.  BMX

EigenLayer

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in EigenLayer are ranked lower than 10 (%) 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.

BMX

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days BMX has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, BMX 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 BMX

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

The idea behind EigenLayer and BMX 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.