Correlation Between Appfolio and Aspen Technology
Can any of the company-specific risk be diversified away by investing in both Appfolio and Aspen Technology 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 Aspen Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Appfolio and Aspen Technology, you can compare the effects of market volatilities on Appfolio and Aspen Technology 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 Aspen Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Appfolio and Aspen Technology.
Diversification Opportunities for Appfolio and Aspen Technology
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Appfolio and Aspen is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Appfolio and Aspen Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aspen Technology 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 Aspen Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aspen Technology has no effect on the direction of Appfolio i.e., Appfolio and Aspen Technology go up and down completely randomly.
Pair Corralation between Appfolio and Aspen Technology
Given the investment horizon of 90 days Appfolio is expected to under-perform the Aspen Technology. In addition to that, Appfolio is 2.99 times more volatile than Aspen Technology. It trades about -0.13 of its total potential returns per unit of risk. Aspen Technology is currently generating about 0.24 per unit of volatility. If you would invest 25,290 in Aspen Technology on November 7, 2024 and sell it today you would earn a total of 1,107 from holding Aspen Technology or generate 4.38% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.24% |
| Values | Daily Returns |
Appfolio vs. Aspen Technology
Performance |
| Timeline |
| Appfolio |
| Aspen Technology |
Appfolio and Aspen Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Appfolio and Aspen Technology
The main advantage of trading using opposite Appfolio and Aspen Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Appfolio position performs unexpectedly, Aspen Technology 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 Aspen Technology will offset losses from the drop in Aspen Technology's long position.The idea behind Appfolio and Aspen Technology 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.| Aspen Technology vs. Bentley Systems | Aspen Technology vs. Tyler Technologies | Aspen Technology vs. Blackbaud | Aspen Technology vs. SSC Technologies Holdings |
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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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