Correlation Between Progressive Corp and Amazon

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

Diversification Opportunities for Progressive Corp and Amazon

-0.43
  Correlation Coefficient

Very good diversification

The 3 months correlation between Progressive and Amazon is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding Progressive Corp and Amazon Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amazon Inc 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 Amazon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Amazon Inc has no effect on the direction of Progressive Corp i.e., Progressive Corp and Amazon go up and down completely randomly.

Pair Corralation between Progressive Corp and Amazon

Considering the 90-day investment horizon Progressive Corp is expected to generate 1.72 times less return on investment than Amazon. But when comparing it to its historical volatility, Progressive Corp is 2.75 times less risky than Amazon. It trades about 0.1 of its potential returns per unit of risk. Amazon Inc is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  9,212  in Amazon Inc on September 3, 2022 and sell it today you would earn a total of  338.00  from holding Amazon Inc or generate 3.67% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthVery Weak
Accuracy95.45%
ValuesDaily Returns

Progressive Corp  vs.  Amazon Inc

 Performance (%) 
       Timeline  
Progressive Corp 
Progressive Performance
5 of 100
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 weak technical and fundamental indicators, Progressive Corp may actually be approaching a critical reversion point that can send shares even higher in January 2023.

Progressive Price Channel

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 weak performance in the last few months, the Stock's basic indicators remain quite persistent which may send shares a bit higher in January 2023. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Amazon Price Channel

Progressive Corp and Amazon Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Progressive Corp and Amazon

The main advantage of trading using opposite Progressive Corp and Amazon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Progressive Corp position performs unexpectedly, Amazon 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 Amazon will offset losses from the drop in Amazon's long position.
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The idea behind Progressive Corp and Amazon Inc 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.

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