Correlation Between Weyco and Wolverine World

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

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

Diversification Opportunities for Weyco and Wolverine World

0.74

Correlation Coefficient

Weyco  Wolverine World

Poor diversification

The 3 months correlation between Weyco and Wolverine is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Weyco Group 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 Weyco 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 Weyco Group 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 Weyco i.e., Weyco and Wolverine World go up and down completely randomly.

Pair Corralation between Weyco and Wolverine World

Given the investment horizon of 90 days Weyco is expected to generate 5.97 times less return on investment than Wolverine World. But when comparing it to its historical volatility, Weyco Group is 1.62 times less risky than Wolverine World. It trades about 0.05 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  1,363  in Wolverine World Wide on August 30, 2024 and sell it today you would earn a total of  954.00  from holding Wolverine World Wide or generate 69.99% return on investment over 90 days.

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

Weyco Group  vs.  Wolverine World Wide

Weyco Group

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Weyco Group are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unfluctuating basic indicators, Weyco may actually be approaching a critical reversion point that can send shares even higher in December 2024.

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 unfluctuating basic indicators, Wolverine World showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Weyco and Wolverine World

The main advantage of trading using opposite Weyco and Wolverine World positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Weyco 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 Weyco Group 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.