Correlation Between Progressive Corp and RE Old

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

Diversification Opportunities for Progressive Corp and RE Old

0.62
  Correlation Coefficient

Poor diversification

The 3 months correlation between Progressive and RE Old is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Progressive Corp and RE Old in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RE Old 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 RE Old. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of RE Old has no effect on the direction of Progressive Corp i.e., Progressive Corp and RE Old go up and down completely randomly.

Pair Corralation between Progressive Corp and RE Old

If you would invest  13,818  in Progressive Corp on December 29, 2023 and sell it today you would earn a total of  6,797  from holding Progressive Corp or generate 49.19% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy0.81%
ValuesDaily Returns

Progressive Corp  vs.  RE Old

 Performance 
       Timeline  
Progressive Corp 

Risk-Adjusted Performance

32 of 100

 
Low
 
High
Very Strong
Compared to the overall equity markets, risk-adjusted returns on investments in Progressive Corp are ranked lower than 32 (%) of all global equities and portfolios over the last 90 days. Even with relatively conflicting technical and fundamental indicators, Progressive Corp reported solid returns over the last few months and may actually be approaching a breakup point.
RE Old 

Risk-Adjusted Performance

0 of 100

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

Progressive Corp and RE Old Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Progressive Corp and RE Old

The main advantage of trading using opposite Progressive Corp and RE Old positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Progressive Corp position performs unexpectedly, RE Old 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 RE Old will offset losses from the drop in RE Old's long position.
The idea behind Progressive Corp and RE Old 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.

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