Correlation Between Enfusion and NCino

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

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

Diversification Opportunities for Enfusion and NCino

0.73

Correlation Coefficient

Enfusion  NCino

Poor diversification

The 3 months correlation between Enfusion and NCino is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Enfusion and nCino Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on nCino 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 NCino. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of nCino Inc has no effect on the direction of Enfusion i.e., Enfusion and NCino go up and down completely randomly.

Pair Corralation between Enfusion and NCino

Given the investment horizon of 90 days Enfusion is expected to generate 3.98 times less return on investment than NCino. But when comparing it to its historical volatility, Enfusion is 1.16 times less risky than NCino. It trades about 0.02 of its potential returns per unit of risk. nCino Inc is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  2,953  in nCino Inc on September 4, 2024 and sell it today you would earn a total of  1,197  from holding nCino Inc or generate 40.54% return on investment over 90 days.

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

Enfusion  vs.  nCino Inc

Enfusion

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Enfusion are ranked lower than 15 (%) 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.

nCino Inc

Risk-Adjusted Performance

22 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in nCino Inc are ranked lower than 22 (%) of all global equities and portfolios over the last 90 days. In spite of very weak basic indicators, NCino displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Enfusion and NCino

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

The idea behind Enfusion and nCino 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.