Correlation Between Blackbaud and Enfusion

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

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

Diversification Opportunities for Blackbaud and Enfusion

-0.35

Correlation Coefficient

Blackbaud  Enfusion

Very good diversification

The 3 months correlation between Blackbaud and Enfusion is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding Blackbaud and Enfusion in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Enfusion and Blackbaud 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 Blackbaud 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 Blackbaud i.e., Blackbaud and Enfusion go up and down completely randomly.

Pair Corralation between Blackbaud and Enfusion

Given the investment horizon of 90 days Blackbaud is expected to under-perform the Enfusion. In addition to that, Blackbaud is 1.26 times more volatile than Enfusion. It trades about -0.13 of its total potential returns per unit of risk. Enfusion is currently generating about 0.07 per unit of volatility. If you would invest  1,047  in Enfusion on December 30, 2024 and sell it today you would earn a total of  63.00  from holding Enfusion or generate 6.02% return on investment over 90 days.

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

Blackbaud  vs.  Enfusion

Blackbaud

Risk-Adjusted Performance

Very Weak

Over the last 90 days Blackbaud has generated negative risk-adjusted returns adding no value to investors with long positions. Despite abnormal performance in the last few months, the Stock's forward-looking signals remain somewhat strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Enfusion

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Enfusion are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating technical and fundamental indicators, Enfusion may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Blackbaud and Enfusion

The main advantage of trading using opposite Blackbaud and Enfusion positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Blackbaud 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 Blackbaud 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.