Correlation Between United Insurance and Progressive

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

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

Diversification Opportunities for United Insurance and Progressive

-0.31

Correlation Coefficient

United Insurance  Progressive

Very good diversification

The 3 months correlation between United and Progressive is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding United Insurance Holdings and The Progressive in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Progressive and United Insurance 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 United Insurance Holdings are associated (or correlated) with Progressive. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Progressive has no effect on the direction of United Insurance i.e., United Insurance and Progressive go up and down completely randomly.

Pair Corralation between United Insurance and Progressive

Assuming the 90 days horizon United Insurance Holdings is expected to under-perform the Progressive. In addition to that, United Insurance is 1.31 times more volatile than The Progressive. It trades about -0.08 of its total potential returns per unit of risk. The Progressive is currently generating about 0.13 per unit of volatility. If you would invest  22,543  in The Progressive on December 30, 2024 and sell it today you would earn a total of  3,142  from holding The Progressive or generate 13.94% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

United Insurance Holdings  vs.  The Progressive

United Insurance Holdings

Risk-Adjusted Performance

Very Weak

Over the last 90 days United Insurance Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unsteady performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Progressive

Risk-Adjusted Performance

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 unsteady basic indicators, Progressive reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with United Insurance and Progressive

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

The idea behind United Insurance Holdings and The Progressive 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.

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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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.