Correlation Between Amazon and Progressive Corp
Can any of the company-specific risk be diversified away by investing in both Amazon 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 Amazon and Progressive Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Amazon Inc and Progressive Corp, you can compare the effects of market volatilities on Amazon 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 Amazon with a short position of Progressive Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Amazon and Progressive Corp.
Diversification Opportunities for Amazon and Progressive Corp
-0.81 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Amazon and Progressive is -0.81. Overlapping area represents the amount of risk that can be diversified away by holding Amazon Inc and Progressive Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Progressive Corp and Amazon 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 Amazon Inc 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 Amazon i.e., Amazon and Progressive Corp go up and down completely randomly.
Pair Corralation between Amazon and Progressive Corp
Assuming the 90 days horizon Amazon Inc is expected to generate 1.45 times more return on investment than Progressive Corp. However, Amazon is 1.45 times more volatile than Progressive Corp. It trades about 0.04 of its potential returns per unit of risk. Progressive Corp is currently generating about -0.17 per unit of risk. If you would invest 16,736 in Amazon Inc on January 31, 2024 and sell it today you would earn a total of 156.00 from holding Amazon Inc or generate 0.93% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Significant |
Accuracy | 95.24% |
Values | Daily Returns |
Amazon Inc vs. Progressive Corp
Performance |
Timeline |
Amazon Inc |
Progressive Corp |
Amazon and Progressive Corp Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Amazon and Progressive Corp
The main advantage of trading using opposite Amazon and Progressive Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Amazon 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.The idea behind Amazon Inc and Progressive Corp 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.Progressive Corp vs. Fevertree Drinks PLC | Progressive Corp vs. NO GRAVITY GAMES | Progressive Corp vs. CanSino Biologics | Progressive Corp vs. ScanSource |
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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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