Correlation Between Progressive and Ameriprise Financial

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

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

Diversification Opportunities for Progressive and Ameriprise Financial

0.2

Correlation Coefficient

Progressive  Ameriprise Financial

Modest diversification

The 3 months correlation between Progressive and Ameriprise is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding The Progressive and Ameriprise Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ameriprise Financial and Progressive 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 The Progressive are associated (or correlated) with Ameriprise Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ameriprise Financial has no effect on the direction of Progressive i.e., Progressive and Ameriprise Financial go up and down completely randomly.

Pair Corralation between Progressive and Ameriprise Financial

Assuming the 90 days horizon The Progressive is expected to generate 1.12 times more return on investment than Ameriprise Financial. However, Progressive is 1.12 times more volatile than Ameriprise Financial. It trades about 0.11 of its potential returns per unit of risk. Ameriprise Financial is currently generating about -0.04 per unit of risk. If you would invest  24,734  in The Progressive on December 2, 2024 and sell it today you would earn a total of  2,336  from holding The Progressive or generate 9.44% return on investment over 90 days.

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

The Progressive  vs.  Ameriprise Financial

Progressive

Risk-Adjusted Performance

OK

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

Ameriprise Financial

Risk-Adjusted Performance

Very Weak

Over the last 90 days Ameriprise Financial has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Ameriprise Financial is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Progressive and Ameriprise Financial

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

The idea behind The Progressive and Ameriprise Financial 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.

Check out your portfolio center.

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.