Correlation Between Floor Decor and Aftermaster

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

By analyzing existing cross correlation between Floor Decor Holdings and Aftermaster, you can compare the effects of market volatilities on Floor Decor and Aftermaster 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 Floor Decor with a short position of Aftermaster. Check out your portfolio center. Please also check ongoing floating volatility patterns of Floor Decor and Aftermaster.

Diversification Opportunities for Floor Decor and Aftermaster

0.0

Correlation Coefficient

Floor Decor  Aftermaster

Pay attention - limited upside

The 3 months correlation between Floor and Aftermaster is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Floor Decor Holdings and Aftermaster in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aftermaster and Floor Decor 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 Floor Decor Holdings are associated (or correlated) with Aftermaster. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aftermaster has no effect on the direction of Floor Decor i.e., Floor Decor and Aftermaster go up and down completely randomly.

Pair Corralation between Floor Decor and Aftermaster

If you would invest  10,949  in Floor Decor Holdings on September 4, 2024 and sell it today you would earn a total of  183.00  from holding Floor Decor Holdings or generate 1.67% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	95.24%
Values	Daily Returns

Floor Decor Holdings  vs.  Aftermaster

Floor Decor Holdings

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Floor Decor Holdings are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, Floor Decor is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Aftermaster

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Aftermaster has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Aftermaster is not utilizing all of its potentials. The newest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Floor Decor and Aftermaster

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

The idea behind Floor Decor Holdings and Aftermaster 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.