Correlation Between Interface and Armstrong World

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

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

Diversification Opportunities for Interface and Armstrong World

0.77

Correlation Coefficient

Interface  Armstrong World

Poor diversification

The 3 months correlation between Interface and Armstrong is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Interface 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 Interface 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 Interface 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 Interface i.e., Interface and Armstrong World go up and down completely randomly.

Pair Corralation between Interface and Armstrong World

Given the investment horizon of 90 days Interface is expected to generate 1.93 times more return on investment than Armstrong World. However, Interface is 1.93 times more volatile than Armstrong World Industries. It trades about 0.14 of its potential returns per unit of risk. Armstrong World Industries is currently generating about 0.24 per unit of risk. If you would invest  2,042  in Interface on May 8, 2025 and sell it today you would earn a total of  529.00  from holding Interface or generate 25.91% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Interface  vs.  Armstrong World Industries

Interface

Risk-Adjusted Performance

Fair

Compared to the overall equity markets, risk-adjusted returns on investments in Interface are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of rather conflicting essential indicators, Interface exhibited solid returns over the last few months and may actually be approaching a breakup point.

Armstrong World Indu

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Armstrong World Industries are ranked lower than 19 (%) 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 Interface and Armstrong World

The main advantage of trading using opposite Interface and Armstrong World positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Interface 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 Interface 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.