Correlation Between Progressive Corp and SPACE

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

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

Diversification Opportunities for Progressive Corp and SPACE

0.64

Correlation Coefficient

Progressive Corp  SPACE

Poor diversification

The 3 months correlation between Progressive and SPACE is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Progressive Corp and SPACE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPACE 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 SPACE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SPACE has no effect on the direction of Progressive Corp i.e., Progressive Corp and SPACE go up and down completely randomly.

Pair Corralation between Progressive Corp and SPACE

Considering the 90-day investment horizon Progressive Corp is expected to generate 17.7 times less return on investment than SPACE. But when comparing it to its historical volatility, Progressive Corp is 3.74 times less risky than SPACE. It trades about 0.05 of its potential returns per unit of risk. SPACE is currently generating about 0.23 of returns per unit of risk over similar time horizon. If you would invest  32.00  in SPACE on September 4, 2024 and sell it today you would earn a total of  28.00  from holding SPACE or generate 87.5% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.46%
Values	Daily Returns

Progressive Corp  vs.  SPACE

Progressive Corp

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Progressive Corp are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. 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.

SPACE

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in SPACE are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady fundamental indicators, SPACE exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Progressive Corp and SPACE

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

The idea behind Progressive Corp and SPACE 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.