Correlation Between Armstrong World and Jeld Wen
Can any of the company-specific risk be diversified away by investing in both Armstrong World and Jeld Wen 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 Jeld Wen 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 Jeld Wen Holding, you can compare the effects of market volatilities on Armstrong World and Jeld Wen 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 Jeld Wen. Check out your portfolio center. Please also check ongoing floating volatility patterns of Armstrong World and Jeld Wen.
Diversification Opportunities for Armstrong World and Jeld Wen
-0.61 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Armstrong and Jeld is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding Armstrong World Industries and Jeld Wen Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jeld Wen Holding 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 Jeld Wen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jeld Wen Holding has no effect on the direction of Armstrong World i.e., Armstrong World and Jeld Wen go up and down completely randomly.
Pair Corralation between Armstrong World and Jeld Wen
Considering the 90-day investment horizon Armstrong World Industries is expected to generate 0.19 times more return on investment than Jeld Wen. However, Armstrong World Industries is 5.15 times less risky than Jeld Wen. It trades about 0.42 of its potential returns per unit of risk. Jeld Wen Holding is currently generating about -0.16 per unit of risk. If you would invest 13,781 in Armstrong World Industries on August 23, 2024 and sell it today you would earn a total of 1,928 from holding Armstrong World Industries or generate 13.99% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Armstrong World Industries vs. Jeld Wen Holding
Performance |
| Timeline |
| Armstrong World Indu |
| Jeld Wen Holding |
Armstrong World and Jeld Wen Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Armstrong World and Jeld Wen
The main advantage of trading using opposite Armstrong World and Jeld Wen positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Armstrong World position performs unexpectedly, Jeld Wen 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 Jeld Wen will offset losses from the drop in Jeld Wen'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 |
| Jeld Wen vs. Gibraltar Industries | Jeld Wen vs. Quanex Building Products | Jeld Wen vs. Perma Pipe International Holdings | Jeld Wen vs. Interface |
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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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