Correlation Between Armstrong World and Caesarstone
Can any of the company-specific risk be diversified away by investing in both Armstrong World and Caesarstone 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 Caesarstone 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 Caesarstone, you can compare the effects of market volatilities on Armstrong World and Caesarstone 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 Caesarstone. Check out your portfolio center. Please also check ongoing floating volatility patterns of Armstrong World and Caesarstone.
Diversification Opportunities for Armstrong World and Caesarstone
-0.8 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Armstrong and Caesarstone is -0.8. Overlapping area represents the amount of risk that can be diversified away by holding Armstrong World Industries and Caesarstone in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Caesarstone 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 Caesarstone. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Caesarstone has no effect on the direction of Armstrong World i.e., Armstrong World and Caesarstone go up and down completely randomly.
Pair Corralation between Armstrong World and Caesarstone
Considering the 90-day investment horizon Armstrong World Industries is expected to generate 0.4 times more return on investment than Caesarstone. However, Armstrong World Industries is 2.53 times less risky than Caesarstone. It trades about 0.16 of its potential returns per unit of risk. Caesarstone is currently generating about 0.03 per unit of risk. If you would invest 9,832 in Armstrong World Industries on August 28, 2024 and sell it today you would earn a total of 6,364 from holding Armstrong World Industries or generate 64.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Armstrong World Industries vs. Caesarstone
Performance |
| Timeline |
| Armstrong World Indu |
| Caesarstone |
Armstrong World and Caesarstone Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Armstrong World and Caesarstone
The main advantage of trading using opposite Armstrong World and Caesarstone positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Armstrong World position performs unexpectedly, Caesarstone 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 Caesarstone will offset losses from the drop in Caesarstone's long position.| Armstrong World vs. Trex Company | Armstrong World vs. Gibraltar Industries | Armstrong World vs. Travis Perkins PLC | Armstrong World vs. Janus International Group |
| Caesarstone vs. Trex Company | Caesarstone vs. Gibraltar Industries | Caesarstone vs. Travis Perkins PLC | Caesarstone 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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