Correlation Between Johnson Controls and Armstrong Flooring
Can any of the company-specific risk be diversified away by investing in both Johnson Controls and Armstrong Flooring 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 Johnson Controls and Armstrong Flooring into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Johnson Controls International and Armstrong Flooring, you can compare the effects of market volatilities on Johnson Controls and Armstrong Flooring 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 Johnson Controls with a short position of Armstrong Flooring. Check out your portfolio center. Please also check ongoing floating volatility patterns of Johnson Controls and Armstrong Flooring.
Diversification Opportunities for Johnson Controls and Armstrong Flooring
0.44 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Johnson and Armstrong is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Johnson Controls International and Armstrong Flooring in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Armstrong Flooring and Johnson Controls 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 Johnson Controls International are associated (or correlated) with Armstrong Flooring. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Armstrong Flooring has no effect on the direction of Johnson Controls i.e., Johnson Controls and Armstrong Flooring go up and down completely randomly.
Pair Corralation between Johnson Controls and Armstrong Flooring
If you would invest 6,408 in Johnson Controls International on January 29, 2024 and sell it today you would earn a total of 103.00 from holding Johnson Controls International or generate 1.61% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 0.32% |
Values | Daily Returns |
Johnson Controls International vs. Armstrong Flooring
Performance |
Timeline |
Johnson Controls Int |
Armstrong Flooring |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Johnson Controls and Armstrong Flooring Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Johnson Controls and Armstrong Flooring
The main advantage of trading using opposite Johnson Controls and Armstrong Flooring positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Johnson Controls position performs unexpectedly, Armstrong Flooring 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 Flooring will offset losses from the drop in Armstrong Flooring's long position.Johnson Controls vs. Carrier GlobalCorp | Johnson Controls vs. Lennox International | Johnson Controls vs. Masco | Johnson Controls vs. Carlisle Companies Incorporated |
Armstrong Flooring vs. Herc Holdings | Armstrong Flooring vs. Loandepot | Armstrong Flooring vs. Lendlease Global Commercial | Armstrong Flooring vs. Multi Ways Holdings |
Check out your portfolio center.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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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