Correlation Between Blackline and Enfusion

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

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

Diversification Opportunities for Blackline and Enfusion

0.81

Correlation Coefficient

Blackline  Enfusion

Very poor diversification

The 3 months correlation between Blackline and Enfusion is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Blackline and Enfusion in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Enfusion and Blackline 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 Blackline 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 Blackline i.e., Blackline and Enfusion go up and down completely randomly.

Pair Corralation between Blackline and Enfusion

Allowing for the 90-day total investment horizon Blackline is expected to generate 0.88 times more return on investment than Enfusion. However, Blackline is 1.14 times less risky than Enfusion. It trades about 0.23 of its potential returns per unit of risk. Enfusion is currently generating about 0.17 per unit of risk. If you would invest  4,851  in Blackline on September 2, 2024 and sell it today you would earn a total of  1,350  from holding Blackline or generate 27.83% return on investment over 90 days.

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

Blackline  vs.  Enfusion

Blackline

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Blackline are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. Despite quite inconsistent essential indicators, Blackline disclosed solid returns over the last few months and may actually be approaching a breakup point.

Enfusion

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Enfusion are ranked lower than 13 (%) 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 Blackline and Enfusion

The main advantage of trading using opposite Blackline and Enfusion positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Blackline 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 Blackline 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.