The England international returns to Wolves, who loaned their captain out last summer after he lost his place following former manager Bruno Lage’s decision to switch to a back four.
Coady made 25 appearances for Everton, scoring two goals, and excelled in Sunday’s 1-0 win over Bournemouth, when they avoided relegation.
But he had not started any of the previous 13 matches when Sean Dyche dropped him to prefer first Michael Keane and then Yerry Mina.
Dyche chose not to buy Coady whereas the expectation was that if former manager Frank Lampard had stayed in charge, a long-term move would have been triggered.
Coady faces an uncertain future at Wolves, with Julen Lopetegui replacing Lage while he was out on loan, but the Spaniard has also preferred to play with just two centre-backs.
Left-back Ruben Vinagre also returns to his parent club, Sporting Lisbon, after an injury-hit year on loan at Goodison Park.
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