Correlation Between Interface and Latham

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

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

Diversification Opportunities for Interface and Latham

0.83

Correlation Coefficient

Interface  Latham

Very poor diversification

The 3 months correlation between Interface and Latham is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Interface and Latham Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Latham Group 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 Latham. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Latham Group has no effect on the direction of Interface i.e., Interface and Latham go up and down completely randomly.

Pair Corralation between Interface and Latham

Given the investment horizon of 90 days Interface is expected to generate 0.96 times more return on investment than Latham. However, Interface is 1.04 times less risky than Latham. It trades about 0.16 of its potential returns per unit of risk. Latham Group is currently generating about 0.15 per unit of risk. If you would invest  2,022  in Interface on May 21, 2025 and sell it today you would earn a total of  673.00  from holding Interface or generate 33.28% return on investment over 90 days.

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

Interface  vs.  Latham Group

Interface

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Interface are ranked lower than 12 (%) 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.

Latham Group

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Latham Group are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of very unsteady forward indicators, Latham displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Interface and Latham

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

The idea behind Interface and Latham Group 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.