Correlation Between White Mountains and Progressive Corp
Can any of the company-specific risk be diversified away by investing in both White Mountains 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 White Mountains and Progressive Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between White Mountains Insurance and Progressive Corp, you can compare the effects of market volatilities on White Mountains 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 White Mountains with a short position of Progressive Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of White Mountains and Progressive Corp.
Diversification Opportunities for White Mountains and Progressive Corp
0.3 | Correlation Coefficient |
Weak diversification
The 3 months correlation between White and Progressive is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding White Mountains Insurance and Progressive Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Progressive Corp and White Mountains 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 White Mountains Insurance 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 White Mountains i.e., White Mountains and Progressive Corp go up and down completely randomly.
Pair Corralation between White Mountains and Progressive Corp
Considering the 90-day investment horizon White Mountains Insurance is expected to generate 1.08 times more return on investment than Progressive Corp. However, White Mountains is 1.08 times more volatile than Progressive Corp. It trades about 0.28 of its potential returns per unit of risk. Progressive Corp is currently generating about 0.28 per unit of risk. If you would invest 181,487 in White Mountains Insurance on August 27, 2024 and sell it today you would earn a total of 17,347 from holding White Mountains Insurance or generate 9.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
White Mountains Insurance vs. Progressive Corp
Performance |
| Timeline |
| White Mountains Insurance |
| Progressive Corp |
White Mountains and Progressive Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with White Mountains and Progressive Corp
The main advantage of trading using opposite White Mountains and Progressive Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if White Mountains 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.| White Mountains vs. NI Holdings | White Mountains vs. Donegal Group A | White Mountains vs. Donegal Group B | White Mountains vs. The Hanover Insurance |
| 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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