Correlation Between Vertex and Appfolio

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

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

Diversification Opportunities for Vertex and Appfolio

-0.77

Correlation Coefficient

Vertex  Appfolio

Pay attention - limited upside

The 3 months correlation between Vertex and Appfolio is -0.77. Overlapping area represents the amount of risk that can be diversified away by holding Vertex and Appfolio in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Appfolio and Vertex 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 Vertex 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 Vertex i.e., Vertex and Appfolio go up and down completely randomly.

Pair Corralation between Vertex and Appfolio

Given the investment horizon of 90 days Vertex is expected to under-perform the Appfolio. In addition to that, Vertex is 1.3 times more volatile than Appfolio. It trades about -0.11 of its total potential returns per unit of risk. Appfolio is currently generating about 0.22 per unit of volatility. If you would invest  21,434  in Appfolio on May 3, 2025 and sell it today you would earn a total of  5,304  from holding Appfolio or generate 24.75% return on investment over 90 days.

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

Vertex  vs.  Appfolio

Vertex

Risk-Adjusted Performance

Very Weak

Over the last 90 days Vertex has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in September 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Appfolio

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Appfolio are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, Appfolio reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Vertex and Appfolio

The main advantage of trading using opposite Vertex and Appfolio positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vertex 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 Vertex 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.