Correlation Between Momentive Global and Appfolio

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

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

Diversification Opportunities for Momentive Global and Appfolio

-0.11

Correlation Coefficient

Momentive Global  Appfolio

Good diversification

The 3 months correlation between Momentive and Appfolio is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding Momentive Global and Appfolio in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Appfolio and Momentive Global 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 Momentive Global 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 Momentive Global i.e., Momentive Global and Appfolio go up and down completely randomly.

Pair Corralation between Momentive Global and Appfolio

If you would invest  22,941  in Appfolio on August 31, 2024 and sell it today you would earn a total of  2,541  from holding Appfolio or generate 11.08% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	1.59%
Values	Daily Returns

Momentive Global  vs.  Appfolio

Momentive Global

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Momentive Global has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Momentive Global is not utilizing all of its potentials. The recent stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Appfolio

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Appfolio are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, Appfolio may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Pair Trading with Momentive Global and Appfolio

The main advantage of trading using opposite Momentive Global and Appfolio positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Momentive Global 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 Momentive Global 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.