Correlation Between QBE Insurance and Progressive Corp
Can any of the company-specific risk be diversified away by investing in both QBE Insurance and Progressive Corp 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 QBE Insurance and Progressive Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between QBE Insurance Group and Progressive Corp, you can compare the effects of market volatilities on QBE Insurance and Progressive Corp 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 QBE Insurance with a short position of Progressive Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of QBE Insurance and Progressive Corp.
Diversification Opportunities for QBE Insurance and Progressive Corp
0.58 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between QBE and Progressive is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding QBE Insurance Group and Progressive Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Progressive Corp and QBE Insurance 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 QBE Insurance Group are associated (or correlated) with Progressive Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Progressive Corp has no effect on the direction of QBE Insurance i.e., QBE Insurance and Progressive Corp go up and down completely randomly.
Pair Corralation between QBE Insurance and Progressive Corp
Assuming the 90 days horizon QBE Insurance is expected to generate 1.49 times less return on investment than Progressive Corp. In addition to that, QBE Insurance is 1.09 times more volatile than Progressive Corp. It trades about 0.06 of its total potential returns per unit of risk. Progressive Corp is currently generating about 0.1 per unit of volatility. If you would invest 12,927 in Progressive Corp on August 28, 2024 and sell it today you would earn a total of 13,875 from holding Progressive Corp or generate 107.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
QBE Insurance Group vs. Progressive Corp
Performance |
| Timeline |
| QBE Insurance Group |
| Progressive Corp |
QBE Insurance and Progressive Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with QBE Insurance and Progressive Corp
The main advantage of trading using opposite QBE Insurance and Progressive Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if QBE Insurance position performs unexpectedly, Progressive Corp 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 Progressive Corp will offset losses from the drop in Progressive Corp's long position.| QBE Insurance vs. Progressive Corp | QBE Insurance vs. White Mountains Insurance | QBE Insurance vs. Chubb | QBE Insurance vs. W R Berkley |
| 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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