Correlation Between Enfusion and Braze

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

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

Diversification Opportunities for Enfusion and Braze

0.04

Correlation Coefficient

Enfusion  Braze

Significant diversification

The 3 months correlation between Enfusion and Braze is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Enfusion and Braze Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Braze Inc 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 Braze. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Braze Inc has no effect on the direction of Enfusion i.e., Enfusion and Braze go up and down completely randomly.

Pair Corralation between Enfusion and Braze

Given the investment horizon of 90 days Enfusion is expected to generate 0.67 times more return on investment than Braze. However, Enfusion is 1.48 times less risky than Braze. It trades about 0.22 of its potential returns per unit of risk. Braze Inc is currently generating about -0.14 per unit of risk. If you would invest  985.00  in Enfusion on December 2, 2024 and sell it today you would earn a total of  163.00  from holding Enfusion or generate 16.55% return on investment over 90 days.

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

Enfusion  vs.  Braze Inc

Enfusion

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Enfusion are ranked lower than 8 (%) 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.

Braze Inc

Risk-Adjusted Performance

Very Weak

Over the last 90 days Braze Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, Braze is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Enfusion and Braze

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

The idea behind Enfusion and Braze Inc 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.