Correlation Between Enfusion and Meridianlink

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

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

Diversification Opportunities for Enfusion and Meridianlink

-0.43

Correlation Coefficient

Enfusion  Meridianlink

Very good diversification

The 3 months correlation between Enfusion and Meridianlink is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding Enfusion and Meridianlink in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Meridianlink and Enfusion 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 Enfusion are associated (or correlated) with Meridianlink. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Meridianlink has no effect on the direction of Enfusion i.e., Enfusion and Meridianlink go up and down completely randomly.

Pair Corralation between Enfusion and Meridianlink

Given the investment horizon of 90 days Enfusion is expected to generate 0.91 times more return on investment than Meridianlink. However, Enfusion is 1.1 times less risky than Meridianlink. It trades about 0.01 of its potential returns per unit of risk. Meridianlink is currently generating about 0.0 per unit of risk. If you would invest  916.00  in Enfusion on February 14, 2024 and sell it today you would lose (1.00) from holding Enfusion or give up 0.11% of portfolio value over 90 days.

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

Enfusion  vs.  Meridianlink

Enfusion

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Enfusion are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy technical and fundamental indicators, Enfusion is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Meridianlink

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Meridianlink has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain quite persistent which may send shares a bit higher in June 2024. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with Enfusion and Meridianlink

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

The idea behind Enfusion and Meridianlink 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.

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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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..