Correlation Between Bandwidth and Appfolio

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

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

Diversification Opportunities for Bandwidth and Appfolio

0.05

Correlation Coefficient

Bandwidth  Appfolio

Significant diversification

The 3 months correlation between Bandwidth and Appfolio is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Bandwidth and Appfolio in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Appfolio and Bandwidth 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 Bandwidth are associated (or correlated) with Appfolio. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Appfolio has no effect on the direction of Bandwidth i.e., Bandwidth and Appfolio go up and down completely randomly.

Pair Corralation between Bandwidth and Appfolio

Given the investment horizon of 90 days Bandwidth is expected to generate 29.39 times less return on investment than Appfolio. In addition to that, Bandwidth is 1.15 times more volatile than Appfolio. It trades about 0.01 of its total potential returns per unit of risk. Appfolio is currently generating about 0.22 per unit of volatility. If you would invest  21,452  in Appfolio on May 7, 2025 and sell it today you would earn a total of  9,918  from holding Appfolio or generate 46.23% return on investment over 90 days.

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

Bandwidth  vs.  Appfolio

Bandwidth

Risk-Adjusted Performance

Weakest

Over the last 90 days Bandwidth has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, Bandwidth is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Appfolio

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Appfolio are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, Appfolio reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Bandwidth and Appfolio

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

The idea behind Bandwidth and Appfolio 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.