Correlation Between Enfusion and WM Technology
Can any of the company-specific risk be diversified away by investing in both Enfusion and WM Technology 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 WM Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Enfusion and WM Technology, you can compare the effects of market volatilities on Enfusion and WM Technology 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 WM Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Enfusion and WM Technology.
Diversification Opportunities for Enfusion and WM Technology
0.58 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Enfusion and MAPSW is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Enfusion and WM Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WM Technology 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 WM Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WM Technology has no effect on the direction of Enfusion i.e., Enfusion and WM Technology go up and down completely randomly.
Pair Corralation between Enfusion and WM Technology
Given the investment horizon of 90 days Enfusion is expected to under-perform the WM Technology. But the stock apears to be less risky and, when comparing its historical volatility, Enfusion is 6.62 times less risky than WM Technology. The stock trades about 0.0 of its potential returns per unit of risk. The WM Technology is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 17.00 in WM Technology on October 12, 2024 and sell it today you would lose (13.75) from holding WM Technology or give up 80.88% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 94.95% |
| Values | Daily Returns |
Enfusion vs. WM Technology
Performance |
| Timeline |
| Enfusion |
| WM Technology |
Enfusion and WM Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Enfusion and WM Technology
The main advantage of trading using opposite Enfusion and WM Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Enfusion position performs unexpectedly, WM Technology 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 WM Technology will offset losses from the drop in WM Technology's long position.| Enfusion vs. ON24 Inc | Enfusion vs. Paycor HCM | Enfusion vs. E2open Parent Holdings | Enfusion vs. Braze Inc |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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