Correlation Between Wolverine World and Culp

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

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

Diversification Opportunities for Wolverine World and Culp

0.59

Correlation Coefficient

Wolverine World  Culp

Very weak diversification

The 3 months correlation between Wolverine and Culp is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Wolverine World Wide and Culp Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Culp Inc and Wolverine 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 Wolverine World Wide are associated (or correlated) with Culp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Culp Inc has no effect on the direction of Wolverine World i.e., Wolverine World and Culp go up and down completely randomly.

Pair Corralation between Wolverine World and Culp

Considering the 90-day investment horizon Wolverine World Wide is expected to under-perform the Culp. In addition to that, Wolverine World is 1.09 times more volatile than Culp Inc. It trades about -0.21 of its total potential returns per unit of risk. Culp Inc is currently generating about -0.03 per unit of volatility. If you would invest  580.00  in Culp Inc on December 28, 2024 and sell it today you would lose (45.00) from holding Culp Inc or give up 7.76% of portfolio value over 90 days.

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

Wolverine World Wide  vs.  Culp Inc

Wolverine World Wide

Risk-Adjusted Performance

Very Weak

Over the last 90 days Wolverine World Wide has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in April 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Culp Inc

Risk-Adjusted Performance

Very Weak

Over the last 90 days Culp Inc has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable essential indicators, Culp is not utilizing all of its potentials. The recent stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Wolverine World and Culp

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

The idea behind Wolverine World Wide and Culp Inc 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.