Correlation Between Selective Insurance and Progressive Corp

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

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

Diversification Opportunities for Selective Insurance and Progressive Corp

-0.37

Correlation Coefficient

Selective Insurance  Progressive Corp

Very good diversification

The 3 months correlation between Selective and Progressive is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Selective Insurance Group and Progressive Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Progressive Corp and Selective Insurance 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 Selective Insurance Group are associated (or correlated) with Progressive Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Progressive Corp has no effect on the direction of Selective Insurance i.e., Selective Insurance and Progressive Corp go up and down completely randomly.

Pair Corralation between Selective Insurance and Progressive Corp

Assuming the 90 days horizon Selective Insurance Group is expected to generate 0.45 times more return on investment than Progressive Corp. However, Selective Insurance Group is 2.24 times less risky than Progressive Corp. It trades about 0.01 of its potential returns per unit of risk. Progressive Corp is currently generating about -0.16 per unit of risk. If you would invest  1,687  in Selective Insurance Group on May 1, 2025 and sell it today you would earn a total of  6.00  from holding Selective Insurance Group or generate 0.36% return on investment over 90 days.

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

Selective Insurance Group  vs.  Progressive Corp

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. Even with relatively invariable forward indicators, Selective Insurance is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Progressive Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days Progressive Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Even with conflicting performance in the last few months, the Stock's technical and fundamental indicators remain relatively invariable which may send shares a bit higher in August 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with Selective Insurance and Progressive Corp

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

The idea behind Selective Insurance Group and Progressive Corp 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 AI Portfolio Prophet module to use AI to generate optimal portfolios and find profitable investment opportunities.