Correlation Between RLI Corp and Progressive Corp
Can any of the company-specific risk be diversified away by investing in both RLI Corp 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 RLI Corp and Progressive Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between RLI Corp and Progressive Corp, you can compare the effects of market volatilities on RLI Corp 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 RLI Corp with a short position of Progressive Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of RLI Corp and Progressive Corp.
Diversification Opportunities for RLI Corp and Progressive Corp
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between RLI and Progressive is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding RLI Corp and Progressive Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Progressive Corp and RLI 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 RLI Corp 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 RLI Corp i.e., RLI Corp and Progressive Corp go up and down completely randomly.
Pair Corralation between RLI Corp and Progressive Corp
Considering the 90-day investment horizon RLI Corp is expected to generate 0.87 times more return on investment than Progressive Corp. However, RLI Corp is 1.15 times less risky than Progressive Corp. It trades about 0.41 of its potential returns per unit of risk. Progressive Corp is currently generating about 0.27 per unit of risk. If you would invest 15,475 in RLI Corp on September 4, 2024 and sell it today you would earn a total of 1,873 from holding RLI Corp or generate 12.1% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
RLI Corp vs. Progressive Corp
Performance |
Timeline |
RLI Corp |
Progressive Corp |
RLI Corp and Progressive Corp Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with RLI Corp and Progressive Corp
The main advantage of trading using opposite RLI Corp and Progressive Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if RLI Corp 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.RLI Corp vs. Progressive Corp | RLI Corp vs. Cincinnati Financial | RLI Corp vs. W R Berkley | RLI Corp vs. The Allstate |
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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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