Correlation Between View and Armstrong Flooring
Can any of the company-specific risk be diversified away by investing in both View 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 View and Armstrong Flooring into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between View Inc and Armstrong Flooring, you can compare the effects of market volatilities on View 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 View with a short position of Armstrong Flooring. Check out your portfolio center. Please also check ongoing floating volatility patterns of View and Armstrong Flooring.
Diversification Opportunities for View and Armstrong Flooring
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between View and Armstrong is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding View Inc and Armstrong Flooring in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Armstrong Flooring and View 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 View Inc 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 View i.e., View and Armstrong Flooring go up and down completely randomly.
Pair Corralation between View and Armstrong Flooring
Assuming the 90 days horizon View Inc is expected to under-perform the Armstrong Flooring. But the pink sheet apears to be less risky and, when comparing its historical volatility, View Inc is 32.6 times less risky than Armstrong Flooring. The pink sheet trades about -0.06 of its potential returns per unit of risk. The Armstrong Flooring is currently generating about 0.39 of returns per unit of risk over similar time horizon. If you would invest 1.00 in Armstrong Flooring on October 25, 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 | Flat |
| Strength | Insignificant |
| Accuracy | 4.46% |
| Values | Daily Returns |
View Inc vs. Armstrong Flooring
Performance |
| Timeline |
| View Inc |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Armstrong Flooring |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
View and Armstrong Flooring Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with View and Armstrong Flooring
The main advantage of trading using opposite View and Armstrong Flooring positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if View 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.The idea behind View Inc and Armstrong Flooring 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.| 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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