Correlation Between Ansell and Armstrong World

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

By analyzing existing cross correlation between Ansell Ltd ADR and Armstrong World Industries, you can compare the effects of market volatilities on Ansell and Armstrong World 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 Ansell with a short position of Armstrong World. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ansell and Armstrong World.

Diversification Opportunities for Ansell and Armstrong World

0.0

Correlation Coefficient

Ansell  Armstrong World

Pay attention - limited upside

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

Pair Corralation between Ansell and Armstrong World

If you would invest  7,761  in Ansell Ltd ADR on January 28, 2024 and sell it today you would earn a total of  0.00  from holding Ansell Ltd ADR or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	2.27%
Values	Daily Returns

Ansell Ltd ADR  vs.  Armstrong World Industries

Ansell Ltd ADR

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ansell Ltd ADR has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong essential indicators, Ansell is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Armstrong World Indu

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Armstrong World Industries are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite fairly weak basic indicators, Armstrong World demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Ansell and Armstrong World

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

The idea behind Ansell Ltd ADR and Armstrong World Industries 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.