Correlation Between Progressive Corp and Sompo Holdings
Can any of the company-specific risk be diversified away by investing in both Progressive Corp and Sompo Holdings 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 Sompo Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Progressive Corp and Sompo Holdings ADR, you can compare the effects of market volatilities on Progressive Corp and Sompo Holdings 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 Sompo Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Progressive Corp and Sompo Holdings.
Diversification Opportunities for Progressive Corp and Sompo Holdings
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Progressive and Sompo is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Progressive Corp and Sompo Holdings ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sompo Holdings ADR 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 Sompo Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sompo Holdings ADR has no effect on the direction of Progressive Corp i.e., Progressive Corp and Sompo Holdings go up and down completely randomly.
Pair Corralation between Progressive Corp and Sompo Holdings
Considering the 90-day investment horizon Progressive Corp is expected to generate 0.49 times more return on investment than Sompo Holdings. However, Progressive Corp is 2.05 times less risky than Sompo Holdings. It trades about 0.15 of its potential returns per unit of risk. Sompo Holdings ADR is currently generating about 0.06 per unit of risk. If you would invest 20,920 in Progressive Corp on August 30, 2024 and sell it today you would earn a total of 5,766 from holding Progressive Corp or generate 27.56% 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. Sompo Holdings ADR
Performance |
| Timeline |
| Progressive Corp |
| Sompo Holdings ADR |
Progressive Corp and Sompo Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Progressive Corp and Sompo Holdings
The main advantage of trading using opposite Progressive Corp and Sompo Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Progressive Corp position performs unexpectedly, Sompo Holdings 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 Sompo Holdings will offset losses from the drop in Sompo Holdings' long position.| Progressive Corp vs. The Travelers Companies | Progressive Corp vs. Chubb | Progressive Corp vs. Cincinnati Financial | Progressive Corp vs. W R Berkley |
| Sompo Holdings vs. Progressive Corp | Sompo Holdings vs. White Mountains Insurance | Sompo Holdings vs. Chubb | Sompo Holdings 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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