Correlation Between Wolverine World and Puma SE
Can any of the company-specific risk be diversified away by investing in both Wolverine World and Puma SE 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 Puma SE 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 Puma SE, you can compare the effects of market volatilities on Wolverine World and Puma SE 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 Puma SE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wolverine World and Puma SE.
Diversification Opportunities for Wolverine World and Puma SE
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Wolverine and Puma is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Wolverine World Wide and Puma SE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Puma SE 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 Puma SE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Puma SE has no effect on the direction of Wolverine World i.e., Wolverine World and Puma SE go up and down completely randomly.
Pair Corralation between Wolverine World and Puma SE
Considering the 90-day investment horizon Wolverine World Wide is expected to generate 2.91 times more return on investment than Puma SE. However, Wolverine World is 2.91 times more volatile than Puma SE. It trades about 0.26 of its potential returns per unit of risk. Puma SE is currently generating about -0.04 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 Together |
| Strength | Significant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Wolverine World Wide vs. Puma SE
Performance |
| Timeline |
| Wolverine World Wide |
| Puma SE |
Wolverine World and Puma SE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Wolverine World and Puma SE
The main advantage of trading using opposite Wolverine World and Puma SE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wolverine World position performs unexpectedly, Puma SE 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 Puma SE will offset losses from the drop in Puma SE's long position.| Wolverine World vs. Weyco Group | Wolverine World vs. Rocky Brands | Wolverine World vs. Vera Bradley | Wolverine World vs. Caleres |
| Puma SE vs. Asics Corp ADR | Puma SE vs. Samsonite International SA | Puma SE vs. Adidas AG ADR | Puma SE vs. Wolverine World Wide |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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