Correlation Between Interface and MasterBrand

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

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

Diversification Opportunities for Interface and MasterBrand

0.6

Correlation Coefficient

Interface  MasterBrand

Poor diversification

The 3 months correlation between Interface and MasterBrand is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Interface and MasterBrand in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MasterBrand 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 MasterBrand. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MasterBrand has no effect on the direction of Interface i.e., Interface and MasterBrand go up and down completely randomly.

Pair Corralation between Interface and MasterBrand

Given the investment horizon of 90 days Interface is expected to generate 0.67 times more return on investment than MasterBrand. However, Interface is 1.48 times less risky than MasterBrand. It trades about -0.02 of its potential returns per unit of risk. MasterBrand is currently generating about -0.11 per unit of risk. If you would invest  2,696  in Interface on August 19, 2025 and sell it today you would lose (102.00) from holding Interface or give up 3.78% of portfolio value over 90 days.

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

Interface  vs.  MasterBrand

Interface

Risk-Adjusted Performance

Weakest

Over the last 90 days Interface has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound essential indicators, Interface is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

MasterBrand

Risk-Adjusted Performance

Weakest

Over the last 90 days MasterBrand has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's fundamental drivers remain rather sound which may send shares a bit higher in December 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Interface and MasterBrand

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

The idea behind Interface and MasterBrand 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 Managers module to screen money managers from public funds and ETFs managed around the world.