Correlation Between Progressive Corp and Fednat Holding

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Can any of the company-specific risk be diversified away by investing in both Progressive Corp and Fednat Holding 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 Progressive Corp and Fednat Holding into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Progressive Corp and Fednat Holding Co, you can compare the effects of market volatilities on Progressive Corp and Fednat Holding 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 Progressive Corp with a short position of Fednat Holding. Check out your portfolio center. Please also check ongoing floating volatility patterns of Progressive Corp and Fednat Holding.

Diversification Opportunities for Progressive Corp and Fednat Holding

-0.56
  Correlation Coefficient

Excellent diversification

The 3 months correlation between Progressive and Fednat is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding Progressive Corp and Fednat Holding Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fednat Holding and Progressive Corp 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 Progressive Corp are associated (or correlated) with Fednat Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fednat Holding has no effect on the direction of Progressive Corp i.e., Progressive Corp and Fednat Holding go up and down completely randomly.

Pair Corralation between Progressive Corp and Fednat Holding

If you would invest  19,203  in Progressive Corp on December 30, 2023 and sell it today you would earn a total of  1,479  from holding Progressive Corp or generate 7.7% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthVery Weak
Accuracy4.55%
ValuesDaily Returns

Progressive Corp  vs.  Fednat Holding Co

 Performance 
       Timeline  
Progressive Corp 

Risk-Adjusted Performance

31 of 100

 
Low
 
High
Very Strong
Compared to the overall equity markets, risk-adjusted returns on investments in Progressive Corp are ranked lower than 31 (%) of all global equities and portfolios over the last 90 days. Even with relatively uncertain technical and fundamental indicators, Progressive Corp reported solid returns over the last few months and may actually be approaching a breakup point.
Fednat Holding 

Risk-Adjusted Performance

0 of 100

 
Low
 
High
Very Weak
Over the last 90 days Fednat Holding Co has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical indicators, Fednat Holding is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Progressive Corp and Fednat Holding Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Progressive Corp and Fednat Holding

The main advantage of trading using opposite Progressive Corp and Fednat Holding positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Progressive Corp position performs unexpectedly, Fednat Holding 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 Fednat Holding will offset losses from the drop in Fednat Holding's long position.
The idea behind Progressive Corp and Fednat Holding Co 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.

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