Correlation Between EigenLayer and TNB

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

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

Diversification Opportunities for EigenLayer and TNB

0.48

Correlation Coefficient

EigenLayer  TNB

Very weak diversification

The 3 months correlation between EigenLayer and TNB is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding EigenLayer and TNB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TNB 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 TNB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TNB has no effect on the direction of EigenLayer i.e., EigenLayer and TNB go up and down completely randomly.

Pair Corralation between EigenLayer and TNB

Assuming the 90 days trading horizon EigenLayer is expected to generate 38.25 times more return on investment than TNB. However, EigenLayer is 38.25 times more volatile than TNB. It trades about 0.13 of its potential returns per unit of risk. TNB is currently generating about 0.25 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 Together
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

EigenLayer  vs.  TNB

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.

TNB

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in TNB are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady fundamental drivers, TNB exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with EigenLayer and TNB

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

The idea behind EigenLayer and TNB 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.