Correlation Between Progressive Corp and HP

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

By analyzing existing cross correlation between Progressive Corp and HP Inc, you can compare the effects of market volatilities on Progressive Corp and HP 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 HP. Check out your portfolio center. Please also check ongoing floating volatility patterns of Progressive Corp and HP.

Diversification Opportunities for Progressive Corp and HP

-0.01

Correlation Coefficient

Progressive Corp  HP

Good diversification

The 3 months correlation between Progressive and HP is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding Progressive Corp and HP Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HP Inc 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 HP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HP Inc has no effect on the direction of Progressive Corp i.e., Progressive Corp and HP go up and down completely randomly.

Pair Corralation between Progressive Corp and HP

Considering the 90-day investment horizon Progressive Corp is expected to under-perform the HP. In addition to that, Progressive Corp is 1.01 times more volatile than HP Inc. It trades about -0.15 of its total potential returns per unit of risk. HP Inc is currently generating about 0.54 per unit of volatility. If you would invest  2,810  in HP Inc on February 24, 2024 and sell it today you would earn a total of  455.00  from holding HP Inc or generate 16.19% return on investment over 90 days.

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

Progressive Corp  vs.  HP Inc

Progressive Corp

Risk-Adjusted Performance

5 of 100

Modest

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.

HP Inc

Risk-Adjusted Performance

12 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in HP Inc are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, HP reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Progressive Corp and HP

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

The idea behind Progressive Corp and HP Inc 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.