Correlation Between Armstrong World and Armstrong Flooring
Can any of the company-specific risk be diversified away by investing in both Armstrong World and Armstrong Flooring 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 World and Armstrong Flooring into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Armstrong World Industries and Armstrong Flooring, you can compare the effects of market volatilities on Armstrong World and Armstrong Flooring 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 World with a short position of Armstrong Flooring. Check out your portfolio center. Please also check ongoing floating volatility patterns of Armstrong World and Armstrong Flooring.
Diversification Opportunities for Armstrong World and Armstrong Flooring
-0.39 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Armstrong and Armstrong is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Armstrong World Industries and Armstrong Flooring in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Armstrong Flooring and Armstrong World 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 World Industries are associated (or correlated) with Armstrong Flooring. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Armstrong Flooring has no effect on the direction of Armstrong World i.e., Armstrong World and Armstrong Flooring go up and down completely randomly.
Pair Corralation between Armstrong World and Armstrong Flooring
If you would invest 13,702 in Armstrong World Industries on August 28, 2024 and sell it today you would earn a total of 2,494 from holding Armstrong World Industries or generate 18.2% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 4.76% |
| Values | Daily Returns |
Armstrong World Industries vs. Armstrong Flooring
Performance |
| Timeline |
| Armstrong World Indu |
| Armstrong Flooring |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Armstrong World and Armstrong Flooring Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Armstrong World and Armstrong Flooring
The main advantage of trading using opposite Armstrong World and Armstrong Flooring positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Armstrong World position performs unexpectedly, Armstrong Flooring 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 Armstrong Flooring will offset losses from the drop in Armstrong Flooring's long position.| Armstrong World vs. Quanex Building Products | Armstrong World vs. Gibraltar Industries | Armstrong World vs. Beacon Roofing Supply | Armstrong World vs. Janus International Group |
| Armstrong Flooring vs. Travis Perkins PLC | Armstrong Flooring vs. Armstrong World Industries | Armstrong Flooring vs. Apogee Enterprises | Armstrong Flooring vs. Quanex Building Products |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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