Correlation Between Selective Insurance and Progressive Corp
Can any of the company-specific risk be diversified away by investing in both Selective 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 Selective 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 Selective Insurance Group and Progressive Corp, you can compare the effects of market volatilities on Selective 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 Selective Insurance with a short position of Progressive Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Selective Insurance and Progressive Corp.
Diversification Opportunities for Selective Insurance and Progressive Corp
0.59 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Selective and Progressive is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Selective 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 Selective 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 Selective 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 Selective Insurance i.e., Selective Insurance and Progressive Corp go up and down completely randomly.
Pair Corralation between Selective Insurance and Progressive Corp
Given the investment horizon of 90 days Selective Insurance Group is expected to generate 1.29 times more return on investment than Progressive Corp. However, Selective Insurance is 1.29 times more volatile than Progressive Corp. It trades about 0.1 of its potential returns per unit of risk. Progressive Corp is currently generating about 0.09 per unit of risk. If you would invest 8,983 in Selective Insurance Group on August 28, 2024 and sell it today you would earn a total of 882.00 from holding Selective Insurance Group or generate 9.82% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Selective Insurance Group vs. Progressive Corp
Performance |
| Timeline |
| Selective Insurance |
| Progressive Corp |
Selective Insurance and Progressive Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Selective Insurance and Progressive Corp
The main advantage of trading using opposite Selective Insurance and Progressive Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Selective 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.| Selective Insurance vs. Kemper | Selective Insurance vs. Donegal Group B | Selective Insurance vs. Argo Group International | Selective Insurance vs. Global Indemnity PLC |
| 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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