Correlation Between Progressive Corp and Kemper

Can any of the company-specific risk be diversified away by investing in both Progressive Corp and Kemper 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 Progressive Corp and Kemper into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Progressive Corp and Kemper, you can compare the effects of market volatilities on Progressive Corp and Kemper 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 Progressive Corp with a short position of Kemper. Check out your portfolio center. Please also check ongoing floating volatility patterns of Progressive Corp and Kemper.

Diversification Opportunities for Progressive Corp and Kemper

0.61

Correlation Coefficient

Progressive Corp  Kemper

Poor diversification

The 3 months correlation between Progressive and Kemper is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Progressive Corp and Kemper in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kemper and Progressive Corp 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 Progressive Corp are associated (or correlated) with Kemper. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kemper has no effect on the direction of Progressive Corp i.e., Progressive Corp and Kemper go up and down completely randomly.

Pair Corralation between Progressive Corp and Kemper

Considering the 90-day investment horizon Progressive Corp is expected to under-perform the Kemper. But the stock apears to be less risky and, when comparing its historical volatility, Progressive Corp is 1.02 times less risky than Kemper. The stock trades about -0.23 of its potential returns per unit of risk. The Kemper is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest  6,836  in Kemper on September 12, 2024 and sell it today you would lose (45.00) from holding Kemper or give up 0.66% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Progressive Corp  vs.  Kemper

Progressive Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Progressive Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable technical and fundamental indicators, Progressive Corp is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Kemper

Risk-Adjusted Performance

12 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Kemper are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Even with relatively inconsistent basic indicators, Kemper reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Progressive Corp and Kemper

The main advantage of trading using opposite Progressive Corp and Kemper positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Progressive Corp position performs unexpectedly, Kemper 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 Kemper will offset losses from the drop in Kemper's long position.

The idea behind Progressive Corp and Kemper pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.