Correlation Between Armstrong World and GMS
Can any of the company-specific risk be diversified away by investing in both Armstrong World and GMS 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 World and GMS into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Armstrong World Industries and GMS Inc, you can compare the effects of market volatilities on Armstrong World and GMS 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 World with a short position of GMS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Armstrong World and GMS.
Diversification Opportunities for Armstrong World and GMS
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Armstrong and GMS is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Armstrong World Industries and GMS Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GMS Inc and Armstrong World 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 World Industries are associated (or correlated) with GMS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GMS Inc has no effect on the direction of Armstrong World i.e., Armstrong World and GMS go up and down completely randomly.
Pair Corralation between Armstrong World and GMS
Considering the 90-day investment horizon Armstrong World is expected to generate 1.73 times less return on investment than GMS. But when comparing it to its historical volatility, Armstrong World Industries is 2.41 times less risky than GMS. It trades about 0.24 of its potential returns per unit of risk. GMS Inc is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest 7,660 in GMS Inc on May 26, 2025 and sell it today you would earn a total of 3,330 from holding GMS Inc or generate 43.47% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Armstrong World Industries vs. GMS Inc
Performance |
| Timeline |
| Armstrong World Indu |
| GMS Inc |
Armstrong World and GMS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Armstrong World and GMS
The main advantage of trading using opposite Armstrong World and GMS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Armstrong World position performs unexpectedly, GMS 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 GMS will offset losses from the drop in GMS's long position.| Armstrong World vs. Quanex Building Products | Armstrong World vs. Apogee Enterprises | Armstrong World vs. QXO, Inc | Armstrong World vs. Janus International Group |
| GMS vs. Armstrong World Industries | GMS vs. Quanex Building Products | GMS vs. Jeld Wen Holding | GMS vs. Janus International Group |
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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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