Correlation Between Progressive Corp and QBE Insurance
Can any of the company-specific risk be diversified away by investing in both Progressive Corp and QBE Insurance 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 QBE Insurance into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Progressive Corp and QBE Insurance Group, you can compare the effects of market volatilities on Progressive Corp and QBE Insurance 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 QBE Insurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Progressive Corp and QBE Insurance.
Diversification Opportunities for Progressive Corp and QBE Insurance
0.35 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Progressive and QBE is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Progressive Corp and QBE Insurance Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on QBE Insurance Group 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 QBE Insurance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of QBE Insurance Group has no effect on the direction of Progressive Corp i.e., Progressive Corp and QBE Insurance go up and down completely randomly.
Pair Corralation between Progressive Corp and QBE Insurance
Considering the 90-day investment horizon Progressive Corp is expected to generate 1.5 times more return on investment than QBE Insurance. However, Progressive Corp is 1.5 times more volatile than QBE Insurance Group. It trades about 0.34 of its potential returns per unit of risk. QBE Insurance Group is currently generating about 0.22 per unit of risk. If you would invest 24,283 in Progressive Corp on September 1, 2024 and sell it today you would earn a total of 2,605 from holding Progressive Corp or generate 10.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Progressive Corp vs. QBE Insurance Group
Performance |
| Timeline |
| Progressive Corp |
| QBE Insurance Group |
Progressive Corp and QBE Insurance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Progressive Corp and QBE Insurance
The main advantage of trading using opposite Progressive Corp and QBE Insurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Progressive Corp position performs unexpectedly, QBE Insurance 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 QBE Insurance will offset losses from the drop in QBE Insurance's long position.| 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 Transaction History module to view history of all your transactions and understand their impact on performance.
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