Correlation Between Progressive Corp and Old Republic

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

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

Diversification Opportunities for Progressive Corp and Old Republic

0.82

Correlation Coefficient

Progressive Corp  Old Republic

Very poor diversification

The 3 months correlation between Progressive and Old is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Progressive Corp and Old Republic International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Old Republic Interna 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 Old Republic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Old Republic Interna has no effect on the direction of Progressive Corp i.e., Progressive Corp and Old Republic go up and down completely randomly.

Pair Corralation between Progressive Corp and Old Republic

Considering the 90-day investment horizon Progressive Corp is expected to generate 2.03 times less return on investment than Old Republic. In addition to that, Progressive Corp is 1.14 times more volatile than Old Republic International. It trades about 0.05 of its total potential returns per unit of risk. Old Republic International is currently generating about 0.11 per unit of volatility. If you would invest  3,563  in Old Republic International on September 4, 2024 and sell it today you would earn a total of  280.00  from holding Old Republic International or generate 7.86% return on investment over 90 days.

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

Progressive Corp  vs.  Old Republic International

Progressive Corp

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Progressive Corp are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. 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.

Old Republic Interna

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Old Republic International are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite fairly weak basic indicators, Old Republic may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Progressive Corp and Old Republic

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

The idea behind Progressive Corp and Old Republic International 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.