Correlation Between Armstrong World and Ansell
Can any of the company-specific risk be diversified away by investing in both Armstrong World and Ansell 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 Ansell 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 Ansell Ltd ADR, you can compare the effects of market volatilities on Armstrong World and Ansell 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 Ansell. Check out your portfolio center. Please also check ongoing floating volatility patterns of Armstrong World and Ansell.
Diversification Opportunities for Armstrong World and Ansell
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Armstrong and Ansell is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Armstrong World Industries and Ansell Ltd ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ansell Ltd ADR 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 Ansell. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ansell Ltd ADR has no effect on the direction of Armstrong World i.e., Armstrong World and Ansell go up and down completely randomly.
Pair Corralation between Armstrong World and Ansell
If you would invest 11,508 in Armstrong World Industries on August 24, 2024 and sell it today you would earn a total of 4,201 from holding Armstrong World Industries or generate 36.51% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 0.8% |
| Values | Daily Returns |
Armstrong World Industries vs. Ansell Ltd ADR
Performance |
| Timeline |
| Armstrong World Indu |
| Ansell Ltd ADR |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Armstrong World and Ansell Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Armstrong World and Ansell
The main advantage of trading using opposite Armstrong World and Ansell positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Armstrong World position performs unexpectedly, Ansell 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 Ansell will offset losses from the drop in Ansell'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 |
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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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