Correlation Between Blackline and Appfolio

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

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

Diversification Opportunities for Blackline and Appfolio

0.69

Correlation Coefficient

Blackline  Appfolio

Poor diversification

The 3 months correlation between Blackline and Appfolio is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Blackline and Appfolio in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Appfolio and Blackline 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 Blackline 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 Blackline i.e., Blackline and Appfolio go up and down completely randomly.

Pair Corralation between Blackline and Appfolio

Allowing for the 90-day total investment horizon Blackline is expected to under-perform the Appfolio. In addition to that, Blackline is 1.27 times more volatile than Appfolio. It trades about -0.11 of its total potential returns per unit of risk. Appfolio is currently generating about -0.07 per unit of volatility. If you would invest  25,249  in Appfolio on January 15, 2025 and sell it today you would lose (3,063) from holding Appfolio or give up 12.13% of portfolio value over 90 days.

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

Blackline  vs.  Appfolio

Blackline

Risk-Adjusted Performance

Very Weak

Over the last 90 days Blackline has generated negative risk-adjusted returns adding no value to investors with long positions. Despite inconsistent performance in the last few months, the Stock's essential indicators remain quite persistent which may send shares a bit higher in May 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Appfolio

Risk-Adjusted Performance

Very Weak

Over the last 90 days Appfolio has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with Blackline and Appfolio

The main advantage of trading using opposite Blackline and Appfolio positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Blackline 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 Blackline 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.