Correlation Between Progressive and Fairfax Financial

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

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

Diversification Opportunities for Progressive and Fairfax Financial

-0.52

Correlation Coefficient

Progressive  Fairfax Financial

Excellent diversification

The 3 months correlation between Progressive and Fairfax is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding The Progressive and Fairfax Financial Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fairfax Financial 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 Fairfax Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fairfax Financial has no effect on the direction of Progressive i.e., Progressive and Fairfax Financial go up and down completely randomly.

Pair Corralation between Progressive and Fairfax Financial

Assuming the 90 days horizon The Progressive is expected to under-perform the Fairfax Financial. In addition to that, Progressive is 1.07 times more volatile than Fairfax Financial Holdings. It trades about -0.07 of its total potential returns per unit of risk. Fairfax Financial Holdings is currently generating about 0.21 per unit of volatility. If you would invest  130,400  in Fairfax Financial Holdings on April 20, 2025 and sell it today you would earn a total of  23,400  from holding Fairfax Financial Holdings or generate 17.94% return on investment over 90 days.

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

The Progressive  vs.  Fairfax Financial 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.

Fairfax Financial

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Fairfax Financial Holdings are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Fairfax Financial reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Progressive and Fairfax Financial

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

The idea behind The Progressive and Fairfax Financial 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.