Correlation Between Armstrong Flooring and Trane Technologies
Can any of the company-specific risk be diversified away by investing in both Armstrong Flooring and Trane Technologies 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 Trane Technologies into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Armstrong Flooring and Trane Technologies plc, you can compare the effects of market volatilities on Armstrong Flooring and Trane Technologies 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 Trane Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Armstrong Flooring and Trane Technologies.
Diversification Opportunities for Armstrong Flooring and Trane Technologies
-0.29 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Armstrong and Trane is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding Armstrong Flooring and Trane Technologies plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Trane Technologies plc 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 Trane Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Trane Technologies plc has no effect on the direction of Armstrong Flooring i.e., Armstrong Flooring and Trane Technologies go up and down completely randomly.
Pair Corralation between Armstrong Flooring and Trane Technologies
If you would invest 39,276 in Trane Technologies plc on August 29, 2024 and sell it today you would earn a total of 2,638 from holding Trane Technologies plc or generate 6.72% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 4.35% |
| Values | Daily Returns |
Armstrong Flooring vs. Trane Technologies plc
Performance |
| Timeline |
| Armstrong Flooring |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Trane Technologies plc |
Armstrong Flooring and Trane Technologies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Armstrong Flooring and Trane Technologies
The main advantage of trading using opposite Armstrong Flooring and Trane Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Armstrong Flooring position performs unexpectedly, Trane Technologies 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 Trane Technologies will offset losses from the drop in Trane Technologies' 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 |
| Trane Technologies vs. Fortune Brands Innovations | Trane Technologies vs. Johnson Controls International | Trane Technologies vs. Lennox International | Trane Technologies vs. Builders FirstSource |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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