Correlation Between Model N and Enfusion

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

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

Diversification Opportunities for Model N and Enfusion

0.0

Correlation Coefficient

Model N  Enfusion

Pay attention - limited upside

The 3 months correlation between Model and Enfusion is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Model N and Enfusion in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Enfusion and Model N 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 Model N 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 Model N i.e., Model N and Enfusion go up and down completely randomly.

Pair Corralation between Model N and Enfusion

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	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Model N  vs.  Enfusion

Model N

Risk-Adjusted Performance

Very Weak

Over the last 90 days Model N has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy fundamental indicators, Model N is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the 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 Model N and Enfusion

The main advantage of trading using opposite Model N and Enfusion positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Model N 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 Model N 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.

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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.