Correlation Between Seaboard and Progressive

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

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

Diversification Opportunities for Seaboard and Progressive

0.81

Correlation Coefficient

Seaboard  Progressive

Very poor diversification

The 3 months correlation between Seaboard and Progressive is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Seaboard and The Progressive in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Progressive and Seaboard 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 Seaboard are associated (or correlated) with Progressive. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Progressive has no effect on the direction of Seaboard i.e., Seaboard and Progressive go up and down completely randomly.

Pair Corralation between Seaboard and Progressive

Assuming the 90 days horizon Seaboard is expected to generate 1.43 times more return on investment than Progressive. However, Seaboard is 1.43 times more volatile than The Progressive. It trades about 0.08 of its potential returns per unit of risk. The Progressive is currently generating about 0.05 per unit of risk. If you would invest  247,806  in Seaboard on November 29, 2024 and sell it today you would earn a total of  24,194  from holding Seaboard or generate 9.76% return on investment over 90 days.

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

Seaboard  vs.  The Progressive

Seaboard

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Seaboard are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, Seaboard may actually be approaching a critical reversion point that can send shares even higher in March 2025.

Progressive

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in The Progressive are ranked lower than 4 (%) 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.

Pair Trading with Seaboard and Progressive

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

The idea behind Seaboard and The Progressive 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.