Correlation Between Piper Sandler and PROG Holdings

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

By analyzing existing cross correlation between Piper Sandler Companies and PROG Holdings, you can compare the effects of market volatilities on Piper Sandler and PROG Holdings 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 Piper Sandler with a short position of PROG Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Piper Sandler and PROG Holdings.

Diversification Opportunities for Piper Sandler and PROG Holdings

0.86

Correlation Coefficient

Piper Sandler  PROG Holdings

Very poor diversification

The 3 months correlation between Piper and PROG is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Piper Sandler Companies and PROG Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PROG Holdings and Piper Sandler 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 Piper Sandler Companies are associated (or correlated) with PROG Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PROG Holdings has no effect on the direction of Piper Sandler i.e., Piper Sandler and PROG Holdings go up and down completely randomly.

Pair Corralation between Piper Sandler and PROG Holdings

Given the investment horizon of 90 days Piper Sandler Companies is expected to generate 0.67 times more return on investment than PROG Holdings. However, Piper Sandler Companies is 1.5 times less risky than PROG Holdings. It trades about 0.14 of its potential returns per unit of risk. PROG Holdings is currently generating about 0.03 per unit of risk. If you would invest  12,743  in Piper Sandler Companies on March 21, 2024 and sell it today you would earn a total of  8,727  from holding Piper Sandler Companies or generate 68.48% return on investment over 90 days.

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

Piper Sandler Companies  vs.  PROG Holdings

Piper Sandler Companies

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Piper Sandler Companies are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Even with relatively uncertain basic indicators, Piper Sandler may actually be approaching a critical reversion point that can send shares even higher in July 2024.

PROG Holdings

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in PROG Holdings are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, PROG Holdings is not utilizing all of its potentials. The recent stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Piper Sandler and PROG Holdings

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

The idea behind Piper Sandler Companies and PROG Holdings 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.