Correlation Between Progressive and Markel

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

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

Diversification Opportunities for Progressive and Markel

0.77

Correlation Coefficient

Progressive  Markel

Poor diversification

The 3 months correlation between Progressive and Markel is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding The Progressive and Markel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Markel 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 Markel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Markel has no effect on the direction of Progressive i.e., Progressive and Markel go up and down completely randomly.

Pair Corralation between Progressive and Markel

Assuming the 90 days horizon The Progressive is expected to under-perform the Markel. In addition to that, Progressive is 1.8 times more volatile than Markel. It trades about -0.26 of its total potential returns per unit of risk. Markel is currently generating about -0.14 per unit of volatility. If you would invest  167,300  in Markel on September 24, 2024 and sell it today you would lose (4,200) from holding Markel or give up 2.51% of portfolio value over 90 days.

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

The Progressive  vs.  Markel

Progressive

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in The Progressive are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Progressive is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Markel

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Markel are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Markel reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Progressive and Markel

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

The idea behind The Progressive and Markel 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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.