Correlation Between Progressive and Insurance Australia
Can any of the company-specific risk be diversified away by investing in both Progressive and Insurance Australia 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 and Insurance Australia into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between The Progressive and Insurance Australia Group, you can compare the effects of market volatilities on Progressive and Insurance Australia 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 with a short position of Insurance Australia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Progressive and Insurance Australia.
Diversification Opportunities for Progressive and Insurance Australia
0.55 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Progressive and Insurance is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding The Progressive and Insurance Australia Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Insurance Australia and Progressive 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 The Progressive are associated (or correlated) with Insurance Australia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Insurance Australia has no effect on the direction of Progressive i.e., Progressive and Insurance Australia go up and down completely randomly.
Pair Corralation between Progressive and Insurance Australia
Assuming the 90 days horizon The Progressive is expected to under-perform the Insurance Australia. But the stock apears to be less risky and, when comparing its historical volatility, The Progressive is 1.23 times less risky than Insurance Australia. The stock trades about -0.02 of its potential returns per unit of risk. The Insurance Australia Group is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 482.00 in Insurance Australia Group on October 19, 2024 and sell it today you would earn a total of 23.00 from holding Insurance Australia Group or generate 4.77% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
The Progressive vs. Insurance Australia Group
Performance |
| Timeline |
| Progressive |
| Insurance Australia |
Progressive and Insurance Australia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Progressive and Insurance Australia
The main advantage of trading using opposite Progressive and Insurance Australia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Progressive position performs unexpectedly, Insurance Australia 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 Insurance Australia will offset losses from the drop in Insurance Australia's long position.| Progressive vs. COSMOSTEEL HLDGS | Progressive vs. Tianjin Capital Environmental | Progressive vs. ELL ENVIRONHLDGS HD 0001 | Progressive vs. CITY OFFICE REIT |
| Insurance Australia vs. ECHO INVESTMENT ZY | Insurance Australia vs. Chuangs China Investments | Insurance Australia vs. Calibre Mining Corp | Insurance Australia vs. Scottish Mortgage Investment |
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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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