Correlation Between VTEX and Enfusion

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

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

Diversification Opportunities for VTEX and Enfusion

-0.35

Correlation Coefficient

VTEX  Enfusion

Very good diversification

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

Pair Corralation between VTEX and Enfusion

Given the investment horizon of 90 days VTEX is expected to under-perform the Enfusion. But the stock apears to be less risky and, when comparing its historical volatility, VTEX is 1.02 times less risky than Enfusion. The stock trades about -0.05 of its potential returns per unit of risk. The Enfusion is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest  806.00  in Enfusion on September 1, 2024 and sell it today you would earn a total of  188.00  from holding Enfusion or generate 23.33% return on investment over 90 days.

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

VTEX  vs.  Enfusion

VTEX

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days VTEX has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal performance, the Stock's technical and fundamental indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Enfusion

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Enfusion are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of very unsteady technical and fundamental indicators, Enfusion displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with VTEX and Enfusion

The main advantage of trading using opposite VTEX and Enfusion positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if VTEX 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 VTEX 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.