Correlation Between Enfusion and Progress Software

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

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

Diversification Opportunities for Enfusion and Progress Software

0.77

Correlation Coefficient

Enfusion  Progress Software

Poor diversification

The 3 months correlation between Enfusion and Progress is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Enfusion and Progress Software in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Progress Software 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 Progress Software. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Progress Software has no effect on the direction of Enfusion i.e., Enfusion and Progress Software go up and down completely randomly.

Pair Corralation between Enfusion and Progress Software

Given the investment horizon of 90 days Enfusion is expected to generate 1.28 times more return on investment than Progress Software. However, Enfusion is 1.28 times more volatile than Progress Software. It trades about 0.26 of its potential returns per unit of risk. Progress Software is currently generating about 0.17 per unit of risk. If you would invest  901.00  in Enfusion on August 31, 2024 and sell it today you would earn a total of  101.00  from holding Enfusion or generate 11.21% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	95.65%
Values	Daily Returns

Enfusion  vs.  Progress Software

Enfusion

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Enfusion are ranked lower than 14 (%) 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.

Progress Software

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Progress Software are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain technical and fundamental indicators, Progress Software unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Enfusion and Progress Software

The main advantage of trading using opposite Enfusion and Progress Software positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Enfusion position performs unexpectedly, Progress Software 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 Progress Software will offset losses from the drop in Progress Software's long position.

The idea behind Enfusion and Progress Software 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.