Correlation Between Wolverine World and VF Corp

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

Diversification Opportunities for Wolverine World and VF Corp

0.91
  Correlation Coefficient

Almost no diversification

The 3 months correlation between Wolverine and VF Corp is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Wolverine World Wide and VF Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VF Corp 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 VF Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VF Corp has no effect on the direction of Wolverine World i.e., Wolverine World and VF Corp go up and down completely randomly.

Pair Corralation between Wolverine World and VF Corp

Considering the 90-day investment horizon Wolverine World Wide is expected to generate 1.04 times more return on investment than VF Corp. However, Wolverine World is 1.04 times more volatile than VF Corp. It trades about -0.28 of its potential returns per unit of risk. VF Corp is currently generating about -0.36 per unit of risk. If you would invest  1,879  in Wolverine World Wide on July 5, 2022 and sell it today you would lose (340.00)  from holding Wolverine World Wide or give up 18.09% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Strong
Accuracy95.24%
ValuesDaily Returns

Wolverine World Wide  vs.  VF Corp

 Performance (%) 
       Timeline  
Wolverine World Wide 
Wolverine Performance
0 of 100
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 conflicting performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in November 2022. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Wolverine Price Channel

VF Corp 
VF Corp Performance
0 of 100
Over the last 90 days VF Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite sluggish performance in the last few months, the Stock's technical and fundamental indicators remain somewhat strong which may send shares a bit higher in November 2022. The current disturbance may also be a sign of long term up-swing for the company investors.

VF Corp Price Channel

Wolverine World and VF Corp Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Wolverine World and VF Corp

The main advantage of trading using opposite Wolverine World and VF Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wolverine World position performs unexpectedly, VF Corp 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 VF Corp will offset losses from the drop in VF Corp's long position.
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The idea behind Wolverine World Wide and VF Corp 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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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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.

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