Correlation Between Safety Insurance and Progressive
Can any of the company-specific risk be diversified away by investing in both Safety Insurance and Progressive 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 Safety Insurance and Progressive into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Safety Insurance Group and The Progressive, you can compare the effects of market volatilities on Safety Insurance and Progressive 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 Safety Insurance with a short position of Progressive. Check out your portfolio center. Please also check ongoing floating volatility patterns of Safety Insurance and Progressive.
Diversification Opportunities for Safety Insurance and Progressive
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Safety and Progressive is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Safety Insurance Group and The Progressive in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Progressive and Safety 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 Safety Insurance Group are associated (or correlated) with Progressive. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Progressive has no effect on the direction of Safety Insurance i.e., Safety Insurance and Progressive go up and down completely randomly.
Pair Corralation between Safety Insurance and Progressive
Assuming the 90 days horizon Safety Insurance is expected to generate 2.39 times less return on investment than Progressive. In addition to that, Safety Insurance is 1.09 times more volatile than The Progressive. It trades about 0.05 of its total potential returns per unit of risk. The Progressive is currently generating about 0.13 per unit of volatility. If you would invest 19,809 in The Progressive on September 3, 2024 and sell it today you would earn a total of 5,816 from holding The Progressive or generate 29.36% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Safety Insurance Group vs. The Progressive
Performance |
| Timeline |
| Safety Insurance |
| Progressive |
Safety Insurance and Progressive Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Safety Insurance and Progressive
The main advantage of trading using opposite Safety Insurance and Progressive positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Safety Insurance position performs unexpectedly, Progressive 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 will offset losses from the drop in Progressive's long position.| Safety Insurance vs. Sims Metal Management | Safety Insurance vs. Flutter Entertainment PLC | Safety Insurance vs. TOWNSQUARE MEDIA INC | Safety Insurance vs. RCS MediaGroup SpA |
| Progressive vs. Ming Le Sports | Progressive vs. National Bank Holdings | Progressive vs. VIAPLAY GROUP AB | Progressive vs. OAKTRSPECLENDNEW |
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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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