Correlation Between Old Republic and Progressive Corp
Can any of the company-specific risk be diversified away by investing in both Old Republic 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 Old Republic and Progressive Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Old Republic International and Progressive Corp, you can compare the effects of market volatilities on Old Republic 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 Old Republic with a short position of Progressive Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Old Republic and Progressive Corp.
Diversification Opportunities for Old Republic and Progressive Corp
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Old and Progressive is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Old Republic International and Progressive Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Progressive Corp and Old Republic 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 Old Republic International 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 Old Republic i.e., Old Republic and Progressive Corp go up and down completely randomly.
Pair Corralation between Old Republic and Progressive Corp
Considering the 90-day investment horizon Old Republic International is expected to generate 0.8 times more return on investment than Progressive Corp. However, Old Republic International is 1.25 times less risky than Progressive Corp. It trades about 0.36 of its potential returns per unit of risk. Progressive Corp is currently generating about 0.28 per unit of risk. If you would invest 3,530 in Old Republic International on August 27, 2024 and sell it today you would earn a total of 330.00 from holding Old Republic International or generate 9.35% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Old Republic International vs. Progressive Corp
Performance |
| Timeline |
| Old Republic Interna |
| Progressive Corp |
Old Republic and Progressive Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Old Republic and Progressive Corp
The main advantage of trading using opposite Old Republic and Progressive Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Old Republic 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.| Old Republic vs. Fiverr International | Old Republic vs. Pinterest | Old Republic vs. Upstart Holdings | Old Republic vs. Fastly Inc |
| Progressive Corp vs. The Travelers Companies | Progressive Corp vs. Chubb | Progressive Corp vs. Cincinnati Financial | Progressive Corp vs. W R Berkley |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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