Correlation Between Progressive Corp and ProAssurance
Can any of the company-specific risk be diversified away by investing in both Progressive Corp and ProAssurance 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 ProAssurance into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Progressive Corp and ProAssurance, you can compare the effects of market volatilities on Progressive Corp and ProAssurance 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 ProAssurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Progressive Corp and ProAssurance.
Diversification Opportunities for Progressive Corp and ProAssurance
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Progressive and ProAssurance is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Progressive Corp and ProAssurance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ProAssurance 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 ProAssurance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ProAssurance has no effect on the direction of Progressive Corp i.e., Progressive Corp and ProAssurance go up and down completely randomly.
Pair Corralation between Progressive Corp and ProAssurance
Considering the 90-day investment horizon Progressive Corp is expected to generate 0.54 times more return on investment than ProAssurance. However, Progressive Corp is 1.85 times less risky than ProAssurance. It trades about 0.18 of its potential returns per unit of risk. ProAssurance is currently generating about -0.1 per unit of risk. If you would invest 23,595 in Progressive Corp on November 3, 2024 and sell it today you would earn a total of 1,049 from holding Progressive Corp or generate 4.45% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Progressive Corp vs. ProAssurance
Performance |
| Timeline |
| Progressive Corp |
| ProAssurance |
Progressive Corp and ProAssurance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Progressive Corp and ProAssurance
The main advantage of trading using opposite Progressive Corp and ProAssurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Progressive Corp position performs unexpectedly, ProAssurance 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 ProAssurance will offset losses from the drop in ProAssurance's long position.| Progressive Corp vs. The Travelers Companies | Progressive Corp vs. Chubb | Progressive Corp vs. Cincinnati Financial | Progressive Corp vs. W R Berkley |
| ProAssurance vs. Argo Group International | ProAssurance vs. Horace Mann Educators | ProAssurance vs. Kemper | ProAssurance vs. Selective Insurance Group |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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