Correlation Between ASICS and Wolverine World

Can any of the company-specific risk be diversified away by investing in both ASICS and Wolverine World 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 ASICS and Wolverine World into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between ASICS and Wolverine World Wide, you can compare the effects of market volatilities on ASICS and Wolverine World 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 ASICS with a short position of Wolverine World. Check out your portfolio center. Please also check ongoing floating volatility patterns of ASICS and Wolverine World.

Diversification Opportunities for ASICS and Wolverine World

-0.84

Correlation Coefficient

ASICS  Wolverine World

Pay attention - limited upside

The 3 months correlation between ASICS and Wolverine is -0.84. Overlapping area represents the amount of risk that can be diversified away by holding ASICS and Wolverine World Wide in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wolverine World Wide and ASICS 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 ASICS are associated (or correlated) with Wolverine World. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wolverine World Wide has no effect on the direction of ASICS i.e., ASICS and Wolverine World go up and down completely randomly.

Pair Corralation between ASICS and Wolverine World

Assuming the 90 days horizon ASICS is expected to generate 17.94 times more return on investment than Wolverine World. However, ASICS is 17.94 times more volatile than Wolverine World Wide. It trades about 0.17 of its potential returns per unit of risk. Wolverine World Wide is currently generating about 0.12 per unit of risk. If you would invest  773.00  in ASICS on September 17, 2024 and sell it today you would earn a total of  757.00  from holding ASICS or generate 97.93% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	66.8%
Values	Daily Returns

ASICS  vs.  Wolverine World Wide

ASICS

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ASICS has generated negative risk-adjusted returns adding no value to investors with long positions. Despite abnormal performance in the last few months, the Stock's fundamental indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Wolverine World Wide

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Wolverine World Wide are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of fairly inconsistent basic indicators, Wolverine World showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with ASICS and Wolverine World

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

The idea behind ASICS and Wolverine World Wide 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.