Correlation Between Progressive and Allstate

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

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

Diversification Opportunities for Progressive and Allstate

0.9

Correlation Coefficient

Progressive  Allstate

Almost no diversification

The 3 months correlation between Progressive and Allstate is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding The Progressive and The Allstate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Allstate and Progressive 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 The Progressive are associated (or correlated) with Allstate. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Allstate has no effect on the direction of Progressive i.e., Progressive and Allstate go up and down completely randomly.

Pair Corralation between Progressive and Allstate

Assuming the 90 days horizon Progressive is expected to generate 1.13 times less return on investment than Allstate. But when comparing it to its historical volatility, The Progressive is 1.13 times less risky than Allstate. It trades about 0.13 of its potential returns per unit of risk. The Allstate is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  17,169  in The Allstate on September 2, 2024 and sell it today you would earn a total of  2,421  from holding The Allstate or generate 14.1% return on investment over 90 days.

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

The Progressive  vs.  The Allstate

Progressive

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in The Progressive are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Progressive may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Allstate

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in The Allstate are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Allstate reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Progressive and Allstate

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

The idea behind The Progressive and The Allstate 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 Stocks Directory module to find actively traded stocks across global markets.