Correlation Between Progressive and United Insurance

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

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

Diversification Opportunities for Progressive and United Insurance

0.69

Correlation Coefficient

Progressive  United Insurance

Poor diversification

The 3 months correlation between Progressive and United is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding The Progressive and United Insurance Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on United Insurance Holdings 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 United Insurance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of United Insurance Holdings has no effect on the direction of Progressive i.e., Progressive and United Insurance go up and down completely randomly.

Pair Corralation between Progressive and United Insurance

Assuming the 90 days horizon The Progressive is expected to under-perform the United Insurance. But the stock apears to be less risky and, when comparing its historical volatility, The Progressive is 1.61 times less risky than United Insurance. The stock trades about -0.07 of its potential returns per unit of risk. The United Insurance Holdings is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  935.00  in United Insurance Holdings on April 20, 2025 and sell it today you would lose (15.00) from holding United Insurance Holdings or give up 1.6% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.44%
Values	Daily Returns

The Progressive  vs.  United Insurance Holdings

Progressive

Risk-Adjusted Performance

Very Weak

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

United Insurance Holdings

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Progressive and United Insurance

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

The idea behind The Progressive and United Insurance Holdings 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.