Correlation Between Enfusion and Jfrog
Can any of the company-specific risk be diversified away by investing in both Enfusion and Jfrog 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 Jfrog into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Enfusion and Jfrog, you can compare the effects of market volatilities on Enfusion and Jfrog 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 Jfrog. Check out your portfolio center. Please also check ongoing floating volatility patterns of Enfusion and Jfrog.
Diversification Opportunities for Enfusion and Jfrog
Poor diversification
The 3 months correlation between Enfusion and Jfrog is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Enfusion and Jfrog in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jfrog 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 Jfrog. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jfrog has no effect on the direction of Enfusion i.e., Enfusion and Jfrog go up and down completely randomly.
Pair Corralation between Enfusion and Jfrog
Given the investment horizon of 90 days Enfusion is expected to generate 0.82 times more return on investment than Jfrog. However, Enfusion is 1.21 times less risky than Jfrog. It trades about 0.24 of its potential returns per unit of risk. Jfrog is currently generating about 0.13 per unit of risk. If you would invest 916.00 in Enfusion on August 28, 2024 and sell it today you would earn a total of 97.00 from holding Enfusion or generate 10.59% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Enfusion vs. Jfrog
Performance |
| Timeline |
| Enfusion |
| Jfrog |
Enfusion and Jfrog Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Enfusion and Jfrog
The main advantage of trading using opposite Enfusion and Jfrog positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Enfusion position performs unexpectedly, Jfrog 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 Jfrog will offset losses from the drop in Jfrog's long position.The idea behind Enfusion and Jfrog 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.
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