Correlation Between Armstrong Flooring and Atlas Engineered
Can any of the company-specific risk be diversified away by investing in both Armstrong Flooring and Atlas Engineered 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 Armstrong Flooring and Atlas Engineered into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Armstrong Flooring and Atlas Engineered Products, you can compare the effects of market volatilities on Armstrong Flooring and Atlas Engineered 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 Armstrong Flooring with a short position of Atlas Engineered. Check out your portfolio center. Please also check ongoing floating volatility patterns of Armstrong Flooring and Atlas Engineered.
Diversification Opportunities for Armstrong Flooring and Atlas Engineered
0.2 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Armstrong and Atlas is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Armstrong Flooring and Atlas Engineered Products in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Atlas Engineered Products and Armstrong Flooring 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 Armstrong Flooring are associated (or correlated) with Atlas Engineered. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Atlas Engineered Products has no effect on the direction of Armstrong Flooring i.e., Armstrong Flooring and Atlas Engineered go up and down completely randomly.
Pair Corralation between Armstrong Flooring and Atlas Engineered
Assuming the 90 days horizon Armstrong Flooring is expected to generate 46.57 times more return on investment than Atlas Engineered. However, Armstrong Flooring is 46.57 times more volatile than Atlas Engineered Products. It trades about 0.19 of its potential returns per unit of risk. Atlas Engineered Products is currently generating about 0.04 per unit of risk. If you would invest 1.80 in Armstrong Flooring on August 24, 2024 and sell it today you would lose (0.80) from holding Armstrong Flooring or give up 44.44% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 9.27% |
| Values | Daily Returns |
Armstrong Flooring vs. Atlas Engineered Products
Performance |
| Timeline |
| Armstrong Flooring |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Atlas Engineered Products |
Armstrong Flooring and Atlas Engineered Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Armstrong Flooring and Atlas Engineered
The main advantage of trading using opposite Armstrong Flooring and Atlas Engineered positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Armstrong Flooring position performs unexpectedly, Atlas Engineered 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 Atlas Engineered will offset losses from the drop in Atlas Engineered's long position.| Armstrong Flooring vs. Travis Perkins PLC | Armstrong Flooring vs. Armstrong World Industries | Armstrong Flooring vs. Apogee Enterprises | Armstrong Flooring vs. Quanex Building Products |
| Atlas Engineered vs. VINCI SA | Atlas Engineered vs. Skanska AB ser | Atlas Engineered vs. Digital Locations | Atlas Engineered vs. Aecom Technology |
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.
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