Correlation Between Wolverine World and PVH Corp

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

Diversification Opportunities for Wolverine World and PVH Corp

0.19

Correlation Coefficient

Wolverine World  PVH Corp

Average diversification

The 3 months correlation between Wolverine and PVH is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding Wolverine World Wide and PVH Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PVH 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 PVH Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PVH Corp has no effect on the direction of Wolverine World i.e., Wolverine World and PVH Corp go up and down completely randomly.

Pair Corralation between Wolverine World and PVH Corp

Considering the 90-day investment horizon Wolverine World Wide is expected to generate 0.94 times more return on investment than PVH Corp. However, Wolverine World Wide is 1.06 times less risky than PVH Corp. It trades about 0.13 of its potential returns per unit of risk. PVH Corp is currently generating about -0.02 per unit of risk. If you would invest  851.00  in Wolverine World Wide on January 26, 2024 and sell it today you would earn a total of  211.00  from holding Wolverine World Wide or generate 24.79% return on investment over 90 days.

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

Wolverine World Wide  vs.  PVH Corp

Wolverine World Wide

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Wolverine World Wide are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating basic indicators, Wolverine World showed solid returns over the last few months and may actually be approaching a breakup point.

PVH Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days PVH Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong basic indicators, PVH Corp is not utilizing all of its potentials. The recent stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Wolverine World and PVH Corp

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

The idea behind Wolverine World Wide and PVH 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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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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.