Correlation Between NCino and E2open Parent

Can any of the company-specific risk be diversified away by investing in both NCino and E2open Parent 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 NCino and E2open Parent into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between nCino Inc and E2open Parent Holdings, you can compare the effects of market volatilities on NCino and E2open Parent 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 NCino with a short position of E2open Parent. Check out your portfolio center. Please also check ongoing floating volatility patterns of NCino and E2open Parent.

Diversification Opportunities for NCino and E2open Parent

0.87

Correlation Coefficient

NCino  E2open Parent

Very poor diversification

The 3 months correlation between NCino and E2open is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding nCino Inc and E2open Parent Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on E2open Parent Holdings and NCino 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 nCino Inc are associated (or correlated) with E2open Parent. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of E2open Parent Holdings has no effect on the direction of NCino i.e., NCino and E2open Parent go up and down completely randomly.

Pair Corralation between NCino and E2open Parent

Given the investment horizon of 90 days nCino Inc is expected to under-perform the E2open Parent. But the stock apears to be less risky and, when comparing its historical volatility, nCino Inc is 1.65 times less risky than E2open Parent. The stock trades about -0.11 of its potential returns per unit of risk. The E2open Parent Holdings is currently generating about -0.05 of returns per unit of risk over similar time horizon. If you would invest  258.00  in E2open Parent Holdings on December 28, 2024 and sell it today you would lose (31.00) from holding E2open Parent Holdings or give up 12.02% of portfolio value over 90 days.

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

nCino Inc  vs.  E2open Parent Holdings

nCino Inc

Risk-Adjusted Performance

Very Weak

Over the last 90 days nCino Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Stock's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

E2open Parent Holdings

Risk-Adjusted Performance

Very Weak

Over the last 90 days E2open Parent Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Pair Trading with NCino and E2open Parent

The main advantage of trading using opposite NCino and E2open Parent positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NCino position performs unexpectedly, E2open Parent 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 E2open Parent will offset losses from the drop in E2open Parent's long position.

The idea behind nCino Inc and E2open Parent Holdings 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.