Correlation Between EigenLayer and Compound

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

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

Diversification Opportunities for EigenLayer and Compound

0.33

Correlation Coefficient

EigenLayer  Compound

Weak diversification

The 3 months correlation between EigenLayer and Compound is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding EigenLayer and Compound in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Compound 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 Compound. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Compound has no effect on the direction of EigenLayer i.e., EigenLayer and Compound go up and down completely randomly.

Pair Corralation between EigenLayer and Compound

Assuming the 90 days trading horizon EigenLayer is expected to generate 1.45 times less return on investment than Compound. In addition to that, EigenLayer is 1.27 times more volatile than Compound. It trades about 0.04 of its total potential returns per unit of risk. Compound is currently generating about 0.07 per unit of volatility. If you would invest  4,438  in Compound on May 14, 2025 and sell it today you would earn a total of  872.00  from holding Compound or generate 19.65% return on investment over 90 days.

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

EigenLayer  vs.  Compound

EigenLayer

Risk-Adjusted Performance

Soft

Compared to the overall equity markets, risk-adjusted returns on investments in EigenLayer are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak fundamental indicators, EigenLayer exhibited solid returns over the last few months and may actually be approaching a breakup point.

Compound

Risk-Adjusted Performance

Mild

Compared to the overall equity markets, risk-adjusted returns on investments in Compound are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak fundamental indicators, Compound exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with EigenLayer and Compound

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

The idea behind EigenLayer and Compound 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.