Correlation Between Chubb and Progressive Corp

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

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

Diversification Opportunities for Chubb and Progressive Corp

0.72

Correlation Coefficient

Chubb  Progressive Corp

Poor diversification

The 3 months correlation between Chubb and Progressive is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Chubb and Progressive Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Progressive Corp and Chubb 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 Chubb 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 Chubb i.e., Chubb and Progressive Corp go up and down completely randomly.

Pair Corralation between Chubb and Progressive Corp

Allowing for the 90-day total investment horizon Chubb is expected to generate 1.82 times less return on investment than Progressive Corp. In addition to that, Chubb is 1.03 times more volatile than Progressive Corp. It trades about 0.11 of its total potential returns per unit of risk. Progressive Corp is currently generating about 0.21 per unit of volatility. If you would invest  23,492  in Progressive Corp on December 29, 2024 and sell it today you would earn a total of  3,975  from holding Progressive Corp or generate 16.92% return on investment over 90 days.

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

Chubb  vs.  Progressive Corp

Chubb

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Chubb are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unfluctuating fundamental drivers, Chubb may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Progressive Corp

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Progressive Corp are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Even with relatively abnormal technical and fundamental indicators, Progressive Corp reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Chubb and Progressive Corp

The main advantage of trading using opposite Chubb and Progressive Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chubb 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 Chubb 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.

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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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.