Correlation Between Progressive Corp and American Financial
Can any of the company-specific risk be diversified away by investing in both Progressive Corp and American Financial 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 American Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Progressive Corp and American Financial Group, you can compare the effects of market volatilities on Progressive Corp and American Financial 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 American Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Progressive Corp and American Financial.
Diversification Opportunities for Progressive Corp and American Financial
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Progressive and American is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Progressive Corp and American Financial Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Financial 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 American Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Financial has no effect on the direction of Progressive Corp i.e., Progressive Corp and American Financial go up and down completely randomly.
Pair Corralation between Progressive Corp and American Financial
Considering the 90-day investment horizon Progressive Corp is expected to generate 1.65 times less return on investment than American Financial. But when comparing it to its historical volatility, Progressive Corp is 1.11 times less risky than American Financial. It trades about 0.3 of its potential returns per unit of risk. American Financial Group is currently generating about 0.45 of returns per unit of risk over similar time horizon. If you would invest 12,672 in American Financial Group on August 31, 2024 and sell it today you would earn a total of 2,121 from holding American Financial Group or generate 16.74% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Progressive Corp vs. American Financial Group
Performance |
| Timeline |
| Progressive Corp |
| American Financial |
Progressive Corp and American Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Progressive Corp and American Financial
The main advantage of trading using opposite Progressive Corp and American Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Progressive Corp position performs unexpectedly, American Financial 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 American Financial will offset losses from the drop in American Financial's long position.| Progressive Corp vs. The Travelers Companies | Progressive Corp vs. Chubb | Progressive Corp vs. Cincinnati Financial | Progressive Corp vs. W R Berkley |
| American Financial vs. Selective Insurance Group | American Financial vs. Horace Mann Educators | American Financial vs. Kemper | American Financial vs. ProAssurance |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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