Correlation Between Armstrong Flooring and Topbuild Corp
Can any of the company-specific risk be diversified away by investing in both Armstrong Flooring and Topbuild Corp 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 Flooring and Topbuild Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Armstrong Flooring and Topbuild Corp, you can compare the effects of market volatilities on Armstrong Flooring and Topbuild Corp 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 Flooring with a short position of Topbuild Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Armstrong Flooring and Topbuild Corp.
Diversification Opportunities for Armstrong Flooring and Topbuild Corp
0.52 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Armstrong and Topbuild is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Armstrong Flooring and Topbuild Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Topbuild Corp and Armstrong Flooring 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 Flooring are associated (or correlated) with Topbuild Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Topbuild Corp has no effect on the direction of Armstrong Flooring i.e., Armstrong Flooring and Topbuild Corp go up and down completely randomly.
Pair Corralation between Armstrong Flooring and Topbuild Corp
If you would invest 35.00 in Armstrong Flooring on January 26, 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 | Weak |
| Accuracy | 4.76% |
| Values | Daily Returns |
Armstrong Flooring vs. Topbuild Corp
Performance |
| Timeline |
| Armstrong Flooring |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Topbuild Corp |
Armstrong Flooring and Topbuild Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Armstrong Flooring and Topbuild Corp
The main advantage of trading using opposite Armstrong Flooring and Topbuild Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Armstrong Flooring position performs unexpectedly, Topbuild Corp 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 Topbuild Corp will offset losses from the drop in Topbuild Corp's long position.| Armstrong Flooring vs. Townsquare Media | Armstrong Flooring vs. National CineMedia | Armstrong Flooring vs. Tyson Foods | Armstrong Flooring vs. ZhongAn Online P |
| Topbuild Corp vs. Api GroupCorp | Topbuild Corp vs. MYR Group | Topbuild Corp vs. Comfort Systems USA | Topbuild Corp vs. Construction Partners |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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