Correlation Between Progressive Corp and Allstate
Can any of the company-specific risk be diversified away by investing in both Progressive Corp 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 Corp and Allstate into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Progressive Corp and The Allstate, you can compare the effects of market volatilities on Progressive Corp 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 Corp with a short position of Allstate. Check out your portfolio center. Please also check ongoing floating volatility patterns of Progressive Corp and Allstate.
Diversification Opportunities for Progressive Corp and Allstate
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Progressive and Allstate is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Progressive Corp and The Allstate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Allstate 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 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 Corp i.e., Progressive Corp and Allstate go up and down completely randomly.
Pair Corralation between Progressive Corp and Allstate
Considering the 90-day investment horizon Progressive Corp is expected to generate 1.16 times less return on investment than Allstate. But when comparing it to its historical volatility, Progressive Corp is 1.35 times less risky than Allstate. It trades about 0.09 of its potential returns per unit of risk. The Allstate is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 16,236 in The Allstate on January 19, 2024 and sell it today you would earn a total of 338.00 from holding The Allstate or generate 2.08% 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. The Allstate
Performance |
| Timeline |
| Progressive Corp |
| Allstate |
Progressive Corp and Allstate Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Progressive Corp and Allstate
The main advantage of trading using opposite Progressive Corp and Allstate positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Progressive Corp 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.| 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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