Correlation Between Crocs and Wolverine World

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

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

Diversification Opportunities for Crocs and Wolverine World

-0.69

Correlation Coefficient

Crocs  Wolverine World

Excellent diversification

The 3 months correlation between Crocs and Wolverine is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding Crocs Inc 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 Crocs 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 Crocs Inc 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 Crocs i.e., Crocs and Wolverine World go up and down completely randomly.

Pair Corralation between Crocs and Wolverine World

Given the investment horizon of 90 days Crocs Inc is expected to under-perform the Wolverine World. But the stock apears to be less risky and, when comparing its historical volatility, Crocs Inc is 1.58 times less risky than Wolverine World. The stock trades about -0.12 of its potential returns per unit of risk. The 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 August 31, 2024 and sell it today you would earn a total of  955.00  from holding Wolverine World Wide or generate 70.12% return on investment over 90 days.

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

Crocs Inc  vs.  Wolverine World Wide

Crocs Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Crocs Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in December 2024. The current disturbance may also be a sign of long term up-swing for the company 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 weak basic indicators, Wolverine World showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Crocs and Wolverine World

The main advantage of trading using opposite Crocs and Wolverine World positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Crocs 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 Crocs Inc 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.