Correlation Between Meridianlink and Appfolio
Can any of the company-specific risk be diversified away by investing in both Meridianlink 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 Meridianlink and Appfolio into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Meridianlink and Appfolio, you can compare the effects of market volatilities on Meridianlink 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 Meridianlink with a short position of Appfolio. Check out your portfolio center. Please also check ongoing floating volatility patterns of Meridianlink and Appfolio.
Diversification Opportunities for Meridianlink and Appfolio
0.39 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Meridianlink and Appfolio is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Meridianlink and Appfolio in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Appfolio and Meridianlink 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 Meridianlink 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 Meridianlink i.e., Meridianlink and Appfolio go up and down completely randomly.
Pair Corralation between Meridianlink and Appfolio
Given the investment horizon of 90 days Meridianlink is expected to generate 2.11 times less return on investment than Appfolio. In addition to that, Meridianlink is 1.14 times more volatile than Appfolio. It trades about 0.17 of its total potential returns per unit of risk. Appfolio is currently generating about 0.42 per unit of volatility. If you would invest 21,037 in Appfolio on August 28, 2024 and sell it today you would earn a total of 4,069 from holding Appfolio or generate 19.34% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Meridianlink vs. Appfolio
Performance |
| Timeline |
| Meridianlink |
| Appfolio |
Meridianlink and Appfolio Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Meridianlink and Appfolio
The main advantage of trading using opposite Meridianlink and Appfolio positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Meridianlink 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 Meridianlink 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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