Correlation Between Envestnet and Enfusion

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

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

Diversification Opportunities for Envestnet and Enfusion

0.56

Correlation Coefficient

Envestnet  Enfusion

Very weak diversification

The 3 months correlation between Envestnet and Enfusion is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Envestnet and Enfusion in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Enfusion and Envestnet 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 Envestnet are associated (or correlated) with Enfusion. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Enfusion has no effect on the direction of Envestnet i.e., Envestnet and Enfusion go up and down completely randomly.

Pair Corralation between Envestnet and Enfusion

Considering the 90-day investment horizon Envestnet is expected to generate 1.54 times more return on investment than Enfusion. However, Envestnet is 1.54 times more volatile than Enfusion. It trades about 0.16 of its potential returns per unit of risk. Enfusion is currently generating about 0.1 per unit of risk. If you would invest  5,711  in Envestnet on February 2, 2024 and sell it today you would earn a total of  498.00  from holding Envestnet or generate 8.72% return on investment over 90 days.

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

Envestnet  vs.  Enfusion

Envestnet

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Envestnet are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of fairly uncertain basic indicators, Envestnet showed solid returns over the last few months and may actually be approaching a breakup point.

Enfusion

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Enfusion are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating technical and fundamental indicators, Enfusion displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Envestnet and Enfusion

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

The idea behind Envestnet and Enfusion 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.