Correlation Between Progressive and Allstate

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

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

Diversification Opportunities for Progressive and Allstate

0.88

Correlation Coefficient

Progressive  Allstate

Very poor diversification

The 3 months correlation between Progressive and Allstate is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding The Progressive and The Allstate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Allstate 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 Allstate. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Allstate has no effect on the direction of Progressive i.e., Progressive and Allstate go up and down completely randomly.

Pair Corralation between Progressive and Allstate

Assuming the 90 days horizon The Progressive is expected to under-perform the Allstate. But the stock apears to be less risky and, when comparing its historical volatility, The Progressive is 1.17 times less risky than Allstate. The stock trades about -0.07 of its potential returns per unit of risk. The The Allstate is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  16,182  in The Allstate on April 20, 2025 and sell it today you would earn a total of  353.00  from holding The Allstate or generate 2.18% return on investment over 90 days.

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

The Progressive  vs.  The Allstate

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.

Allstate

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in The Allstate are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Allstate 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 Allstate

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

The idea behind The Progressive and The Allstate 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.