Correlation Between Appfolio and Workiva

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

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

Diversification Opportunities for Appfolio and Workiva

0.69

Correlation Coefficient

Appfolio  Workiva

Poor diversification

The @@bw1eo months correlation between Appfolio and Workiva is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Appfolio and Workiva in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Workiva and Appfolio 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 Appfolio are associated (or correlated) with Workiva. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Workiva has no effect on the direction of Appfolio i.e., Appfolio and Workiva go up and down completely randomly.

Pair Corralation between Appfolio and Workiva

Given the investment horizon of 90 days Appfolio is expected to generate 1.63 times more return on investment than Workiva. However, Appfolio is 1.63 times more volatile than Workiva. It trades about 0.05 of its potential returns per unit of risk. Workiva is currently generating about 0.02 per unit of risk. If you would invest  23,350  in Appfolio on February 3, 2024 and sell it today you would earn a total of  561.00  from holding Appfolio or generate 2.4% return on investment over 90 days.

Time Period	@@bw1EO Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Appfolio  vs.  Workiva

Appfolio

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Appfolio are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady basic indicators, Appfolio may actually be approaching a critical reversion point that can send shares even higher in June 2024.

Workiva

Risk-Adjusted Performance

1 of 100

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Workiva are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent forward-looking signals, Workiva is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Appfolio and Workiva

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

The idea behind Appfolio and Workiva 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.