Correlation Between PROG Holdings and Vestis

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

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

Diversification Opportunities for PROG Holdings and Vestis

0.42

Correlation Coefficient

PROG Holdings  Vestis

Very weak diversification

The 3 months correlation between PROG and Vestis is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding PROG Holdings and Vestis in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vestis and PROG Holdings 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 PROG Holdings are associated (or correlated) with Vestis. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vestis has no effect on the direction of PROG Holdings i.e., PROG Holdings and Vestis go up and down completely randomly.

Pair Corralation between PROG Holdings and Vestis

Considering the 90-day investment horizon PROG Holdings is expected to generate 2.17 times less return on investment than Vestis. But when comparing it to its historical volatility, PROG Holdings is 1.18 times less risky than Vestis. It trades about 0.04 of its potential returns per unit of risk. Vestis is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  1,502  in Vestis on September 13, 2024 and sell it today you would earn a total of  160.00  from holding Vestis or generate 10.65% return on investment over 90 days.

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

PROG Holdings  vs.  Vestis

PROG Holdings

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in PROG Holdings are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, PROG Holdings is not utilizing all of its potentials. The recent stock price disturbance, may contribute to mid-run losses for the stockholders.

Vestis

Risk-Adjusted Performance

5 of 100

Modest

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

Pair Trading with PROG Holdings and Vestis

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

The idea behind PROG Holdings and Vestis 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.