Correlation Between Armstrong Flooring and Trex
Can any of the company-specific risk be diversified away by investing in both Armstrong Flooring and Trex 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 Trex into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Armstrong Flooring and Trex Company, you can compare the effects of market volatilities on Armstrong Flooring and Trex 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 Trex. Check out your portfolio center. Please also check ongoing floating volatility patterns of Armstrong Flooring and Trex.
Diversification Opportunities for Armstrong Flooring and Trex
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Armstrong and Trex is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Armstrong Flooring and Trex Company in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Trex Company 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 Trex. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Trex Company has no effect on the direction of Armstrong Flooring i.e., Armstrong Flooring and Trex go up and down completely randomly.
Pair Corralation between Armstrong Flooring and Trex
Assuming the 90 days horizon Armstrong Flooring is expected to generate 164.56 times more return on investment than Trex. However, Armstrong Flooring is 164.56 times more volatile than Trex Company. It trades about 0.39 of its potential returns per unit of risk. Trex Company is currently generating about 0.03 per unit of risk. If you would invest 1.00 in Armstrong Flooring on October 25, 2024 and sell it today you would earn a total of 0.00 from holding Armstrong Flooring or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 1.01% |
| Values | Daily Returns |
Armstrong Flooring vs. Trex Company
Performance |
| Timeline |
| Armstrong Flooring |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Trex Company |
Armstrong Flooring and Trex Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Armstrong Flooring and Trex
The main advantage of trading using opposite Armstrong Flooring and Trex positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Armstrong Flooring position performs unexpectedly, Trex 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 Trex will offset losses from the drop in Trex'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 |
| Trex vs. Quanex Building Products | Trex vs. Armstrong World Industries | Trex vs. Gibraltar Industries | Trex vs. Apogee Enterprises |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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