Correlation Between PROG Holdings and Solution Financial
Can any of the company-specific risk be diversified away by investing in both PROG Holdings and Solution 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 PROG Holdings and Solution Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PROG Holdings and Solution Financial, you can compare the effects of market volatilities on PROG Holdings and Solution 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 PROG Holdings with a short position of Solution Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of PROG Holdings and Solution Financial.
Diversification Opportunities for PROG Holdings and Solution Financial
-0.02 | Correlation Coefficient |
Good diversification
The 3 months correlation between PROG and Solution is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding PROG Holdings and Solution Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Solution Financial and PROG Holdings 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 PROG Holdings are associated (or correlated) with Solution Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Solution Financial has no effect on the direction of PROG Holdings i.e., PROG Holdings and Solution Financial go up and down completely randomly.
Pair Corralation between PROG Holdings and Solution Financial
Considering the 90-day investment horizon PROG Holdings is expected to generate 0.85 times more return on investment than Solution Financial. However, PROG Holdings is 1.17 times less risky than Solution Financial. It trades about 0.24 of its potential returns per unit of risk. Solution Financial is currently generating about -0.07 per unit of risk. If you would invest 4,198 in PROG Holdings on August 26, 2024 and sell it today you would earn a total of 545.00 from holding PROG Holdings or generate 12.98% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
PROG Holdings vs. Solution Financial
Performance |
| Timeline |
| PROG Holdings |
| Solution Financial |
PROG Holdings and Solution Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PROG Holdings and Solution Financial
The main advantage of trading using opposite PROG Holdings and Solution Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PROG Holdings position performs unexpectedly, Solution 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 Solution Financial will offset losses from the drop in Solution Financial's long position.| PROG Holdings vs. Adtalem Global Education | PROG Holdings vs. Enerpac Tool Group | PROG Holdings vs. Piper Sandler Companies |
| Solution Financial vs. Ashtead Group plc | Solution Financial vs. African Discovery Group | Solution Financial vs. Emeco Holdings Limited | Solution Financial vs. BOC Aviation Limited |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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