Correlation Between Enfusion and HubSpot
Can any of the company-specific risk be diversified away by investing in both Enfusion and HubSpot 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 HubSpot into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Enfusion and HubSpot, you can compare the effects of market volatilities on Enfusion and HubSpot 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 HubSpot. Check out your portfolio center. Please also check ongoing floating volatility patterns of Enfusion and HubSpot.
Diversification Opportunities for Enfusion and HubSpot
Very poor diversification
The 3 months correlation between Enfusion and HubSpot is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Enfusion and HubSpot in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HubSpot 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 HubSpot. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HubSpot has no effect on the direction of Enfusion i.e., Enfusion and HubSpot go up and down completely randomly.
Pair Corralation between Enfusion and HubSpot
Given the investment horizon of 90 days Enfusion is expected to generate 2.84 times less return on investment than HubSpot. But when comparing it to its historical volatility, Enfusion is 1.17 times less risky than HubSpot. It trades about 0.22 of its potential returns per unit of risk. HubSpot is currently generating about 0.53 of returns per unit of risk over similar time horizon. If you would invest 55,808 in HubSpot on August 28, 2024 and sell it today you would earn a total of 17,374 from holding HubSpot or generate 31.13% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Enfusion vs. HubSpot
Performance |
| Timeline |
| Enfusion |
| HubSpot |
Enfusion and HubSpot Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Enfusion and HubSpot
The main advantage of trading using opposite Enfusion and HubSpot positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Enfusion position performs unexpectedly, HubSpot 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 HubSpot will offset losses from the drop in HubSpot's long position.The idea behind Enfusion and HubSpot 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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
Other Complementary Tools
| Competition Analyzer Analyze and compare many basic indicators for a group of related or unrelated entities | |
| Stock Screener Find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook. | |
| ETF Categories List of ETF categories grouped based on various criteria, such as the investment strategy or type of investments | |
| FinTech Suite Use AI to screen and filter profitable investment opportunities | |
| Crypto Correlations Use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins |