Correlation Between Progressive Corp and Palo Alto
Can any of the company-specific risk be diversified away by investing in both Progressive Corp and Palo Alto 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 Palo Alto into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Progressive Corp and Palo Alto Networks, you can compare the effects of market volatilities on Progressive Corp and Palo Alto 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 Palo Alto. Check out your portfolio center. Please also check ongoing floating volatility patterns of Progressive Corp and Palo Alto.
Diversification Opportunities for Progressive Corp and Palo Alto
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Progressive and Palo is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Progressive Corp and Palo Alto Networks in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Palo Alto Networks 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 Palo Alto. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Palo Alto Networks has no effect on the direction of Progressive Corp i.e., Progressive Corp and Palo Alto go up and down completely randomly.
Pair Corralation between Progressive Corp and Palo Alto
Assuming the 90 days horizon Progressive Corp is expected to generate 2.92 times less return on investment than Palo Alto. But when comparing it to its historical volatility, Progressive Corp is 1.46 times less risky than Palo Alto. It trades about 0.05 of its potential returns per unit of risk. Palo Alto Networks is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 13,026 in Palo Alto Networks on September 14, 2024 and sell it today you would earn a total of 24,919 from holding Palo Alto Networks or generate 191.3% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 99.8% |
| Values | Daily Returns |
Progressive Corp vs. Palo Alto Networks
Performance |
| Timeline |
| Progressive Corp |
| Palo Alto Networks |
Progressive Corp and Palo Alto Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Progressive Corp and Palo Alto
The main advantage of trading using opposite Progressive Corp and Palo Alto positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Progressive Corp position performs unexpectedly, Palo Alto 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 Palo Alto will offset losses from the drop in Palo Alto's long position.| Progressive Corp vs. Palo Alto Networks | Progressive Corp vs. HubSpot | Progressive Corp vs. Superior Plus Corp | Progressive Corp vs. SIVERS SEMICONDUCTORS AB |
| Palo Alto vs. HubSpot | Palo Alto vs. Superior Plus Corp | Palo Alto vs. SIVERS SEMICONDUCTORS AB | Palo Alto vs. NorAm Drilling AS |
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 Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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