Correlation Between Amazon and Progressive Corp

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Can any of the company-specific risk be diversified away by investing in both Amazon 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 Amazon and Progressive Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Amazon Inc and Progressive Corp, you can compare the effects of market volatilities on Amazon 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 Amazon with a short position of Progressive Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Amazon and Progressive Corp.

Diversification Opportunities for Amazon and Progressive Corp

-0.34
  Correlation Coefficient

Very good diversification

The 3 months correlation between Amazon and Progressive is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding Amazon Inc and Progressive Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Progressive Corp and Amazon 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 Amazon Inc 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 Amazon i.e., Amazon and Progressive Corp go up and down completely randomly.

Pair Corralation between Amazon and Progressive Corp

Given the investment horizon of 90 days Amazon Inc is expected to under-perform the Progressive Corp. In addition to that, Amazon is 1.67 times more volatile than Progressive Corp. It trades about -0.03 of its total potential returns per unit of risk. Progressive Corp is currently generating about 0.06 per unit of volatility. If you would invest  8,736  in Progressive Corp on August 31, 2022 and sell it today you would earn a total of  4,266  from holding Progressive Corp or generate 48.83% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Amazon Inc  vs.  Progressive Corp

 Performance (%) 
       Timeline  
Amazon Inc 
Amazon Performance
0 of 100
Over the last 90 days Amazon Inc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's basic indicators remain quite persistent which may send shares a bit higher in December 2022. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Amazon Price Channel

Progressive Corp 
Progressive Performance
4 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Progressive Corp are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Even with relatively unsteady technical and fundamental indicators, Progressive Corp may actually be approaching a critical reversion point that can send shares even higher in December 2022.

Progressive Price Channel

Amazon and Progressive Corp Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Amazon and Progressive Corp

The main advantage of trading using opposite Amazon and Progressive Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Amazon 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.
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The idea behind Amazon Inc 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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Check out your portfolio center. 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.

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