Correlation Between Armstrong Flooring and Atlas Engineered

Can any of the company-specific risk be diversified away by investing in both Armstrong Flooring and Atlas Engineered 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 Atlas Engineered into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Armstrong Flooring and Atlas Engineered Products, you can compare the effects of market volatilities on Armstrong Flooring and Atlas Engineered 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 Atlas Engineered. Check out your portfolio center. Please also check ongoing floating volatility patterns of Armstrong Flooring and Atlas Engineered.

Diversification Opportunities for Armstrong Flooring and Atlas Engineered

0.36

Correlation Coefficient

Armstrong Flooring  Atlas Engineered

Weak diversification

The 3 months correlation between Armstrong and Atlas is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Armstrong Flooring and Atlas Engineered Products in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Atlas Engineered Products 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 Atlas Engineered. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Atlas Engineered Products has no effect on the direction of Armstrong Flooring i.e., Armstrong Flooring and Atlas Engineered go up and down completely randomly.

Pair Corralation between Armstrong Flooring and Atlas Engineered

If you would invest  1.00  in Armstrong Flooring on September 2, 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	1.56%
Values	Daily Returns

Armstrong Flooring  vs.  Atlas Engineered Products

Armstrong Flooring

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Armstrong Flooring has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable forward indicators, Armstrong Flooring is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Atlas Engineered Products

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Atlas Engineered Products has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unfluctuating performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Armstrong Flooring and Atlas Engineered

The main advantage of trading using opposite Armstrong Flooring and Atlas Engineered positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Armstrong Flooring position performs unexpectedly, Atlas Engineered 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 Atlas Engineered will offset losses from the drop in Atlas Engineered's long position.

The idea behind Armstrong Flooring and Atlas Engineered Products 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.

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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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.