Correlation Between Birkenstock Holding and Wolverine World

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

By analyzing existing cross correlation between Birkenstock Holding plc and Wolverine World Wide, you can compare the effects of market volatilities on Birkenstock Holding and Wolverine World 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 Birkenstock Holding with a short position of Wolverine World. Check out your portfolio center. Please also check ongoing floating volatility patterns of Birkenstock Holding and Wolverine World.

Diversification Opportunities for Birkenstock Holding and Wolverine World

-0.11

Correlation Coefficient

Birkenstock Holding  Wolverine World

Good diversification

The 3 months correlation between Birkenstock and Wolverine is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding Birkenstock Holding plc and Wolverine World Wide in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wolverine World Wide and Birkenstock Holding 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 Birkenstock Holding plc are associated (or correlated) with Wolverine World. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wolverine World Wide has no effect on the direction of Birkenstock Holding i.e., Birkenstock Holding and Wolverine World go up and down completely randomly.

Pair Corralation between Birkenstock Holding and Wolverine World

Given the investment horizon of 90 days Birkenstock Holding is expected to generate 12.49 times less return on investment than Wolverine World. But when comparing it to its historical volatility, Birkenstock Holding plc is 2.51 times less risky than Wolverine World. It trades about 0.04 of its potential returns per unit of risk. Wolverine World Wide is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest  1,362  in Wolverine World Wide on September 3, 2024 and sell it today you would earn a total of  957.00  from holding Wolverine World Wide or generate 70.26% return on investment over 90 days.

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

Birkenstock Holding plc  vs.  Wolverine World Wide

Birkenstock Holding plc

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Birkenstock Holding plc are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent basic indicators, Birkenstock Holding is not utilizing all of its potentials. The newest stock price mess, may contribute to short-term losses for the institutional investors.

Wolverine World Wide

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Wolverine World Wide are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of fairly uncertain basic indicators, Wolverine World showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Birkenstock Holding and Wolverine World

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

The idea behind Birkenstock Holding plc and Wolverine World Wide 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.