Correlation Between Progressive Corp and Selective Insurance

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

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

Diversification Opportunities for Progressive Corp and Selective Insurance

-0.33

Correlation Coefficient

Progressive Corp  Selective Insurance

Very good diversification

The 3 months correlation between Progressive and Selective is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding Progressive Corp and Selective Insurance Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Selective Insurance and Progressive Corp 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 Progressive Corp are associated (or correlated) with Selective Insurance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Selective Insurance has no effect on the direction of Progressive Corp i.e., Progressive Corp and Selective Insurance go up and down completely randomly.

Pair Corralation between Progressive Corp and Selective Insurance

Considering the 90-day investment horizon Progressive Corp is expected to generate 0.79 times more return on investment than Selective Insurance. However, Progressive Corp is 1.26 times less risky than Selective Insurance. It trades about 0.07 of its potential returns per unit of risk. Selective Insurance Group is currently generating about -0.05 per unit of risk. If you would invest  23,747  in Progressive Corp on January 7, 2025 and sell it today you would earn a total of  1,636  from holding Progressive Corp or generate 6.89% return on investment over 90 days.

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

Progressive Corp  vs.  Selective Insurance Group

Progressive Corp

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Progressive Corp are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Even with relatively abnormal technical and fundamental indicators, Progressive Corp may actually be approaching a critical reversion point that can send shares even higher in May 2025.

Selective Insurance

Risk-Adjusted Performance

Very Weak

Over the last 90 days Selective Insurance Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's technical and fundamental indicators remain strong and the recent confusion on Wall Street may also be a sign of long-lasting gains for the firm traders.

Pair Trading with Progressive Corp and Selective Insurance

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

The idea behind Progressive Corp and Selective Insurance Group 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 Stocks Directory module to find actively traded stocks across global markets.