Correlation Between Wolverine World and Meritage
Can any of the company-specific risk be diversified away by investing in both Wolverine World and Meritage 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 Meritage 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 Meritage, you can compare the effects of market volatilities on Wolverine World and Meritage 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 Meritage. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wolverine World and Meritage.
Diversification Opportunities for Wolverine World and Meritage
-0.44 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Wolverine and Meritage is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding Wolverine World Wide and Meritage in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Meritage 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 Meritage. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Meritage has no effect on the direction of Wolverine World i.e., Wolverine World and Meritage go up and down completely randomly.
Pair Corralation between Wolverine World and Meritage
Considering the 90-day investment horizon Wolverine World Wide is expected to generate 3.34 times more return on investment than Meritage. However, Wolverine World is 3.34 times more volatile than Meritage. It trades about 0.26 of its potential returns per unit of risk. Meritage is currently generating about 0.13 per unit of risk. If you would invest 1,618 in Wolverine World Wide on August 28, 2024 and sell it today you would earn a total of 756.00 from holding Wolverine World Wide or generate 46.72% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Wolverine World Wide vs. Meritage
Performance |
| Timeline |
| Wolverine World Wide |
| Meritage |
Wolverine World and Meritage Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Wolverine World and Meritage
The main advantage of trading using opposite Wolverine World and Meritage positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wolverine World position performs unexpectedly, Meritage 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 Meritage will offset losses from the drop in Meritage's long position.| Wolverine World vs. Weyco Group | Wolverine World vs. Rocky Brands | Wolverine World vs. Vera Bradley | Wolverine World vs. Caleres |
| Meritage vs. TRI Pointe Homes | Meritage vs. MI Homes | Meritage vs. Beazer Homes USA | Meritage vs. Century Communities |
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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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