ARMSTRONG WORLD INDUSTRIES INC

61.1 +0.92 (+1.51%) Sell

Profit booking on the minds of AWI investors as it marginally outperforms

13 min read

AWI delivered stellar performance today. On a longer term basis, investors in ARMSTRONG WORLD INDUSTRIES INC made 0.0% per day. Tuesday's performance of +1.51% was a significant outperformance compared to it's daily average.

[Themes containing AWI]

Buy-and-Hold investors in AWI experienced a maximum drawdown of -17.95% over the last three months. It lost -12.71% during this strong down trending period. There were both Long and Short signals during this period, where the short signals were significantly more profitable than the long signals.

Trend

AWI has been underperforming the SP500 index in recent time, after having outperformed till 8 Nov, 2018. Over the last 2 years 11 months and 14 days, AWI outperformed the SP500 index on 54% days.

AWI returned losses on 62% days in the last three months. During this time, it delivered on average -0.2% per day. It delivered it's worst daily return of -4.85%, during this period, on Friday, 9 Nov, 2018. There was initially a bearish trend during this period which started on 4 Oct, 2018 and went on till 12 Oct, 2018. The trend delivered -10.0% losses to investors. This was followed by a bullish trend that started on 29 Oct, 2018 and ended on 2 Nov, 2018. This bullish trend delivered +14.92% to investors.

AWI had 7 profitable and 5 loss making months over the last year. During the last year, AWI underperformed SP500 index on monthly return basis. AWI was also a more risky investment than SP500 index as it's worst month in the last year, Oct 2018, returned -10.82% compared to -7.75% returned by SP500 index in Dec 2018. AWI had a shorter streak of profitable months than SP500 index. It only went up in 5 straight months during the last year. It is interesting to note that both AWI and SP500 index significantly outperform during months when quarterly/annual results are announced.

I have probably purchased fifty 'hot tips' in my career, maybe even more. When I put them all together, I know I am a net loser.
-- Charles Schwab

AWI is becoming less volatile overall. In comparison, the SP500 index is seeing a rise in volatility. During the last three months, there was a significant surge in AWI's volatility from 28 Sep, 2018 to 30 Oct, 2018. While there was a significant surge in the SP500 index's volatility from 19 Sep, 2018 to 29 Oct, 2018.

Advanced/professional short-term investors should note that AWI has significant positive skewness in it's return distribution. This indicates that investors can expect AWI to recover from drawdowns quickly. Which makes AWI a good candidate for investing on short-term bullish trends or even counter-trends hoping for a pull-back.

SP500 index has more chance of extreme outcomes than AWI. Therefore, SP500 must receive a lower allocation than AWI in your portfolio. SP500 index usually has shorter drawdown period than AWI.

On a general note (since you are interested in AWI), three instruments that have performed similar to AWI are IRT, HALL and EPD. They must all be evaluated as alternative investment options and for diversification.

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