Correlation Between Interface and Masco

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Can any of the company-specific risk be diversified away by investing in both Interface and Masco 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 Interface and Masco into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Interface and Masco, you can compare the effects of market volatilities on Interface and Masco 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 Interface with a short position of Masco. Check out your portfolio center. Please also check ongoing floating volatility patterns of Interface and Masco.

Diversification Opportunities for Interface and Masco

InterfaceMascoDiversified AwayInterfaceMascoDiversified Away100%
0.44
  Correlation Coefficient

Very weak diversification

The 3 months correlation between Interface and Masco is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Interface and Masco in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Masco and Interface 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 Interface are associated (or correlated) with Masco. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Masco has no effect on the direction of Interface i.e., Interface and Masco go up and down completely randomly.

Pair Corralation between Interface and Masco

Given the investment horizon of 90 days Interface is expected to under-perform the Masco. In addition to that, Interface is 2.34 times more volatile than Masco. It trades about -0.29 of its total potential returns per unit of risk. Masco is currently generating about -0.17 per unit of volatility. If you would invest  8,007  in Masco on November 29, 2024 and sell it today you would lose (404.00) from holding Masco or give up 5.05% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy95.45%
ValuesDaily Returns

Interface  vs.  Masco

 Performance 
JavaScript chart by amCharts 3.21.15Dec2025Feb -10-505
JavaScript chart by amCharts 3.21.15TILE MAS
       Timeline  
Interface 

Risk-Adjusted Performance

Very Weak

 
Weak
 
Strong
Over the last 90 days Interface has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's essential indicators remain rather sound which may send shares a bit higher in March 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb18192021222324252627
Masco 

Risk-Adjusted Performance

Very Weak

 
Weak
 
Strong
Over the last 90 days Masco has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Masco is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb727476788082

Interface and Masco Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-4.05-3.04-2.02-1.00.010.891.782.673.56 0.050.100.15
JavaScript chart by amCharts 3.21.15TILE MAS
       Returns  

Pair Trading with Interface and Masco

The main advantage of trading using opposite Interface and Masco positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Interface position performs unexpectedly, Masco 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 Masco will offset losses from the drop in Masco's long position.
The idea behind Interface and Masco pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.

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