Correlation Between Progressive Corp and W R

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Can any of the company-specific risk be diversified away by investing in both Progressive Corp and W R 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 W R into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Progressive Corp and W R Berkley, you can compare the effects of market volatilities on Progressive Corp and W R 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 W R. Check out your portfolio center. Please also check ongoing floating volatility patterns of Progressive Corp and W R.

Diversification Opportunities for Progressive Corp and W R

0.68
  Correlation Coefficient

Poor diversification

The 3 months correlation between Progressive and WRB is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Progressive Corp and W R Berkley in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on W R Berkley 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 W R. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of W R Berkley has no effect on the direction of Progressive Corp i.e., Progressive Corp and W R go up and down completely randomly.

Pair Corralation between Progressive Corp and W R

Considering the 90-day investment horizon Progressive Corp is expected to generate 2.0 times less return on investment than W R. But when comparing it to its historical volatility, Progressive Corp is 1.13 times less risky than W R. It trades about 0.12 of its potential returns per unit of risk. W R Berkley is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest  5,648  in W R Berkley on September 5, 2024 and sell it today you would earn a total of  718.00  from holding W R Berkley or generate 12.71% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

Progressive Corp  vs.  W R Berkley

 Performance 
       Timeline  
Progressive Corp 

Risk-Adjusted Performance

4 of 100

 
Weak
 
Strong
Modest
Compared to the overall equity markets, risk-adjusted returns on investments in Progressive Corp are ranked lower than 4 (%) 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.
W R Berkley 

Risk-Adjusted Performance

7 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in W R Berkley are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite somewhat inconsistent basic indicators, W R may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Progressive Corp and W R Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Progressive Corp and W R

The main advantage of trading using opposite Progressive Corp and W R positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Progressive Corp position performs unexpectedly, W R 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 W R will offset losses from the drop in W R's long position.
The idea behind Progressive Corp and W R Berkley 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.
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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.

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