Correlation Between Godaddy and Appian Corp

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

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

Diversification Opportunities for Godaddy and Appian Corp

0.68

Correlation Coefficient

Godaddy  Appian Corp

Poor diversification

The 3 months correlation between Godaddy and Appian is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Godaddy and Appian Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Appian Corp and Godaddy 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 Godaddy are associated (or correlated) with Appian Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Appian Corp has no effect on the direction of Godaddy i.e., Godaddy and Appian Corp go up and down completely randomly.

Pair Corralation between Godaddy and Appian Corp

Given the investment horizon of 90 days Godaddy is expected to under-perform the Appian Corp. But the stock apears to be less risky and, when comparing its historical volatility, Godaddy is 1.46 times less risky than Appian Corp. The stock trades about -0.06 of its potential returns per unit of risk. The Appian Corp is currently generating about -0.04 of returns per unit of risk over similar time horizon. If you would invest  3,279  in Appian Corp on December 29, 2024 and sell it today you would lose (345.00) from holding Appian Corp or give up 10.52% of portfolio value over 90 days.

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

Godaddy  vs.  Appian Corp

Godaddy

Risk-Adjusted Performance

Very Weak

Over the last 90 days Godaddy has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's fundamental indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Appian Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days Appian Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Pair Trading with Godaddy and Appian Corp

The main advantage of trading using opposite Godaddy and Appian Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Godaddy position performs unexpectedly, Appian Corp 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 Appian Corp will offset losses from the drop in Appian Corp's long position.

The idea behind Godaddy and Appian Corp 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.