Correlation Between Progressive Corp and Hiscox

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

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

Diversification Opportunities for Progressive Corp and Hiscox

-0.29

Correlation Coefficient

Progressive Corp  Hiscox

Very good diversification

The 3 months correlation between Progressive and Hiscox is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding Progressive Corp and Hiscox in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hiscox 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 Hiscox. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hiscox has no effect on the direction of Progressive Corp i.e., Progressive Corp and Hiscox go up and down completely randomly.

Pair Corralation between Progressive Corp and Hiscox

Considering the 90-day investment horizon Progressive Corp is expected to generate 0.59 times more return on investment than Hiscox. However, Progressive Corp is 1.7 times less risky than Hiscox. It trades about -0.01 of its potential returns per unit of risk. Hiscox is currently generating about -0.03 per unit of risk. If you would invest  24,205  in Progressive Corp on October 24, 2024 and sell it today you would lose (288.00) from holding Progressive Corp or give up 1.19% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.24%
Values	Daily Returns

Progressive Corp  vs.  Hiscox

Progressive Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Progressive Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable technical and fundamental indicators, Progressive Corp is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Hiscox

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Hiscox has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong essential indicators, Hiscox is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Progressive Corp and Hiscox

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

The idea behind Progressive Corp and Hiscox 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.