Correlation Between Sprout Social and Enfusion
Can any of the company-specific risk be diversified away by investing in both Sprout Social 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 Sprout Social and Enfusion into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sprout Social and Enfusion, you can compare the effects of market volatilities on Sprout Social 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 Sprout Social with a short position of Enfusion. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sprout Social and Enfusion.
Diversification Opportunities for Sprout Social and Enfusion
0.14 | Correlation Coefficient |
Average diversification
The 3 months correlation between Sprout and Enfusion is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding Sprout Social and Enfusion in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Enfusion and Sprout Social 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 Sprout Social 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 Sprout Social i.e., Sprout Social and Enfusion go up and down completely randomly.
Pair Corralation between Sprout Social and Enfusion
Considering the 90-day investment horizon Sprout Social is expected to generate 2.07 times more return on investment than Enfusion. However, Sprout Social is 2.07 times more volatile than Enfusion. It trades about 0.23 of its potential returns per unit of risk. Enfusion is currently generating about 0.22 per unit of risk. If you would invest 2,710 in Sprout Social on August 28, 2024 and sell it today you would earn a total of 579.00 from holding Sprout Social or generate 21.37% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sprout Social vs. Enfusion
Performance |
| Timeline |
| Sprout Social |
| Enfusion |
Sprout Social and Enfusion Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sprout Social and Enfusion
The main advantage of trading using opposite Sprout Social and Enfusion positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sprout Social 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 Sprout Social 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.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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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