Correlation Between Latham and Armstrong World
Can any of the company-specific risk be diversified away by investing in both Latham and Armstrong World 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 Latham and Armstrong World into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Latham Group and Armstrong World Industries, you can compare the effects of market volatilities on Latham and Armstrong World 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 Latham with a short position of Armstrong World. Check out your portfolio center. Please also check ongoing floating volatility patterns of Latham and Armstrong World.
Diversification Opportunities for Latham and Armstrong World
-0.03 | Correlation Coefficient |
Good diversification
The 3 months correlation between Latham and Armstrong is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding Latham Group and Armstrong World Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Armstrong World Indu and Latham 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 Latham Group are associated (or correlated) with Armstrong World. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Armstrong World Indu has no effect on the direction of Latham i.e., Latham and Armstrong World go up and down completely randomly.
Pair Corralation between Latham and Armstrong World
Given the investment horizon of 90 days Latham Group is expected to generate 3.5 times more return on investment than Armstrong World. However, Latham is 3.5 times more volatile than Armstrong World Industries. It trades about 0.06 of its potential returns per unit of risk. Armstrong World Industries is currently generating about 0.16 per unit of risk. If you would invest 342.00 in Latham Group on September 1, 2024 and sell it today you would earn a total of 321.00 from holding Latham Group or generate 93.86% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Latham Group vs. Armstrong World Industries
Performance |
| Timeline |
| Latham Group |
| Armstrong World Indu |
Latham and Armstrong World Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Latham and Armstrong World
The main advantage of trading using opposite Latham and Armstrong World positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Latham position performs unexpectedly, Armstrong World 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 World will offset losses from the drop in Armstrong World's long position.| Latham vs. Janus International Group | Latham vs. Quanex Building Products | Latham vs. GMS Inc | Latham vs. Gibraltar Industries |
| Armstrong World vs. Trex Company | Armstrong World vs. Gibraltar Industries | Armstrong World vs. Apogee Enterprises | Armstrong World vs. Travis Perkins PLC |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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