Correlation Between Caesarstone and Armstrong Flooring
Can any of the company-specific risk be diversified away by investing in both Caesarstone 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 Caesarstone and Armstrong Flooring into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Caesarstone and Armstrong Flooring, you can compare the effects of market volatilities on Caesarstone 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 Caesarstone with a short position of Armstrong Flooring. Check out your portfolio center. Please also check ongoing floating volatility patterns of Caesarstone and Armstrong Flooring.
Diversification Opportunities for Caesarstone and Armstrong Flooring
0.2 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Caesarstone and Armstrong is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Caesarstone and Armstrong Flooring in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Armstrong Flooring and Caesarstone 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 Caesarstone 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 Caesarstone i.e., Caesarstone and Armstrong Flooring go up and down completely randomly.
Pair Corralation between Caesarstone and Armstrong Flooring
If you would invest 1.00 in Armstrong Flooring on August 28, 2024 and sell it today you would earn a total of 0.00 from holding Armstrong Flooring or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 4.55% |
| Values | Daily Returns |
Caesarstone vs. Armstrong Flooring
Performance |
| Timeline |
| Caesarstone |
| Armstrong Flooring |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Caesarstone and Armstrong Flooring Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Caesarstone and Armstrong Flooring
The main advantage of trading using opposite Caesarstone and Armstrong Flooring positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Caesarstone 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.| Caesarstone vs. Trex Company | Caesarstone vs. Travis Perkins PLC | Caesarstone vs. Janus International Group | Caesarstone vs. Interface |
| 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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