Correlation Between Armstrong Flooring and Ubisoft Entertainment

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

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

Diversification Opportunities for Armstrong Flooring and Ubisoft Entertainment

-0.39

Correlation Coefficient

Armstrong Flooring  Ubisoft Entertainment

Very good diversification

The 3 months correlation between Armstrong and Ubisoft is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Armstrong Flooring and Ubisoft Entertainment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ubisoft Entertainment and Armstrong Flooring 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 Armstrong Flooring are associated (or correlated) with Ubisoft Entertainment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ubisoft Entertainment has no effect on the direction of Armstrong Flooring i.e., Armstrong Flooring and Ubisoft Entertainment go up and down completely randomly.

Pair Corralation between Armstrong Flooring and Ubisoft Entertainment

If you would invest  2,255  in Ubisoft Entertainment on January 29, 2024 and sell it today you would earn a total of  44.00  from holding Ubisoft Entertainment or generate 1.95% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	1.56%
Values	Daily Returns

Armstrong Flooring  vs.  Ubisoft Entertainment

Armstrong Flooring

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Armstrong Flooring has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong technical and fundamental indicators, Armstrong Flooring is not utilizing all of its potentials. The recent stock price confusion, may contribute to short-horizon losses for the traders.

Ubisoft Entertainment

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Ubisoft Entertainment are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable technical and fundamental indicators, Ubisoft Entertainment is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Armstrong Flooring and Ubisoft Entertainment

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

The idea behind Armstrong Flooring and Ubisoft Entertainment 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.