Correlation Between Progressive Corp and Stewart Information

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

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

Diversification Opportunities for Progressive Corp and Stewart Information

0.73

Correlation Coefficient

Progressive Corp  Stewart Information

Poor diversification

The 3 months correlation between Progressive and Stewart is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Progressive Corp and Stewart Information Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stewart Information 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 Stewart Information. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Stewart Information has no effect on the direction of Progressive Corp i.e., Progressive Corp and Stewart Information go up and down completely randomly.

Pair Corralation between Progressive Corp and Stewart Information

Considering the 90-day investment horizon Progressive Corp is expected to generate 0.75 times more return on investment than Stewart Information. However, Progressive Corp is 1.33 times less risky than Stewart Information. It trades about 0.22 of its potential returns per unit of risk. Stewart Information Services is currently generating about 0.07 per unit of risk. If you would invest  23,492  in Progressive Corp on December 30, 2024 and sell it today you would earn a total of  4,394  from holding Progressive Corp or generate 18.7% return on investment over 90 days.

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

Progressive Corp  vs.  Stewart Information Services

Progressive Corp

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Progressive Corp are ranked lower than 17 (%) 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.

Stewart Information

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Stewart Information Services are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of rather inconsistent basic indicators, Stewart Information may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Progressive Corp and Stewart Information

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

The idea behind Progressive Corp and Stewart Information Services 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.