Correlation Between Oi SA and Progressive Corp

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

Diversification Opportunities for Oi SA and Progressive Corp

0.36
  Correlation Coefficient

Weak diversification

The 3 months correlation between OIBRQ and Progressive is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Oi SA ADR and Progressive Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Progressive Corp and Oi SA 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 Oi SA ADR are associated (or correlated) with Progressive Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Progressive Corp has no effect on the direction of Oi SA i.e., Oi SA and Progressive Corp go up and down completely randomly.

Pair Corralation between Oi SA and Progressive Corp

Assuming the 90 days horizon Oi SA ADR is expected to generate 204.12 times more return on investment than Progressive Corp. However, Oi SA is 204.12 times more volatile than Progressive Corp. It trades about 0.33 of its potential returns per unit of risk. Progressive Corp is currently generating about 0.07 per unit of risk. If you would invest  487.00  in Oi SA ADR on November 1, 2022 and sell it today you would lose (486.00)  from holding Oi SA ADR or give up 99.79% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy99.8%
ValuesDaily Returns

Oi SA ADR  vs.  Progressive Corp

 Performance (%) 
       Timeline  
Oi SA ADR 
OIBRQ Performance
34 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Oi SA ADR are ranked lower than 34 (%) of all global equities and portfolios over the last 90 days. In spite of very conflicting basic indicators, Oi SA displayed solid returns over the last few months and may actually be approaching a breakup point.

OIBRQ Price Channel

Progressive Corp 
Progressive Performance
5 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Progressive Corp are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable technical and fundamental indicators, Progressive Corp is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Progressive Price Channel

Oi SA and Progressive Corp Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Oi SA and Progressive Corp

The main advantage of trading using opposite Oi SA and Progressive Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Oi SA position performs unexpectedly, Progressive 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 Progressive Corp will offset losses from the drop in Progressive Corp's long position.
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The idea behind Oi SA ADR and Progressive 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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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 Global Correlations module to find global opportunities by holding instruments from different markets.

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