Correlation Between Wolverine World and Noodles

Can any of the company-specific risk be diversified away by investing in both Wolverine World and Noodles 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 Noodles 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 Noodles Company, you can compare the effects of market volatilities on Wolverine World and Noodles 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 Noodles. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wolverine World and Noodles.

Diversification Opportunities for Wolverine World and Noodles

-0.35

Correlation Coefficient

Wolverine World  Noodles

Very good diversification

The 3 months correlation between Wolverine and Noodles is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding Wolverine World Wide and Noodles Company in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Noodles Company 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 Noodles. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Noodles Company has no effect on the direction of Wolverine World i.e., Wolverine World and Noodles go up and down completely randomly.

Pair Corralation between Wolverine World and Noodles

Considering the 90-day investment horizon Wolverine World Wide is expected to under-perform the Noodles. But the stock apears to be less risky and, when comparing its historical volatility, Wolverine World Wide is 2.46 times less risky than Noodles. The stock trades about -0.22 of its potential returns per unit of risk. The Noodles Company is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest  60.00  in Noodles Company on December 30, 2024 and sell it today you would earn a total of  53.00  from holding Noodles Company or generate 88.33% return on investment over 90 days.

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

Wolverine World Wide  vs.  Noodles Company

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.

Noodles Company

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Noodles Company are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively inconsistent essential indicators, Noodles unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Wolverine World and Noodles

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

The idea behind Wolverine World Wide and Noodles Company 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.

Check out your portfolio center.

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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.