Correlation Between Progressive Corp and Fairfax Financial
Can any of the company-specific risk be diversified away by investing in both Progressive Corp and Fairfax Financial 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 Fairfax Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Progressive Corp and Fairfax Financial Holdings, you can compare the effects of market volatilities on Progressive Corp and Fairfax Financial 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 Fairfax Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Progressive Corp and Fairfax Financial.
Diversification Opportunities for Progressive Corp and Fairfax Financial
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Progressive and Fairfax is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Progressive Corp and Fairfax Financial Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fairfax Financial 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 Fairfax Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fairfax Financial has no effect on the direction of Progressive Corp i.e., Progressive Corp and Fairfax Financial go up and down completely randomly.
Pair Corralation between Progressive Corp and Fairfax Financial
If you would invest 20,592 in Progressive Corp on January 25, 2024 and sell it today you would earn a total of 628.00 from holding Progressive Corp or generate 3.05% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 4.55% |
| Values | Daily Returns |
Progressive Corp vs. Fairfax Financial Holdings
Performance |
| Timeline |
| Progressive Corp |
| Fairfax Financial |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Insignificant
Progressive Corp and Fairfax Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Progressive Corp and Fairfax Financial
The main advantage of trading using opposite Progressive Corp and Fairfax Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Progressive Corp position performs unexpectedly, Fairfax Financial 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 Fairfax Financial will offset losses from the drop in Fairfax Financial's long position.| Progressive Corp vs. The Travelers Companies | Progressive Corp vs. Chubb | Progressive Corp vs. Cincinnati Financial | Progressive Corp vs. W R Berkley |
| Fairfax Financial vs. RLI Corp | Fairfax Financial vs. Chubb | Fairfax Financial vs. Progressive Corp | Fairfax Financial vs. White Mountains Insurance |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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