Correlation Between Citigroup and Appfolio

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

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

Diversification Opportunities for Citigroup and Appfolio

0.83

Correlation Coefficient

Citigroup  Appfolio

Very poor diversification

The 3 months correlation between Citigroup and Appfolio is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Appfolio in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Appfolio and Citigroup 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 Citigroup 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 Citigroup i.e., Citigroup and Appfolio go up and down completely randomly.

Pair Corralation between Citigroup and Appfolio

Taking into account the 90-day investment horizon Citigroup is expected to generate 1.0 times less return on investment than Appfolio. But when comparing it to its historical volatility, Citigroup is 2.11 times less risky than Appfolio. It trades about 0.26 of its potential returns per unit of risk. Appfolio is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  21,460  in Appfolio on May 17, 2025 and sell it today you would earn a total of  5,080  from holding Appfolio or generate 23.67% return on investment over 90 days.

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

Citigroup  vs.  Appfolio

Citigroup

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Citigroup are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady fundamental indicators, Citigroup exhibited solid returns over the last few months and may actually be approaching a breakup point.

Appfolio

Risk-Adjusted Performance

Fair

Compared to the overall equity markets, risk-adjusted returns on investments in Appfolio are ranked lower than 9 (%) 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 Citigroup and Appfolio

The main advantage of trading using opposite Citigroup and Appfolio positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup 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 Citigroup 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.