Correlation Between Progressive Corp and Prudential Financial

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

Diversification Opportunities for Progressive Corp and Prudential Financial

0.16
  Correlation Coefficient

Average diversification

The 3 months correlation between Progressive and Prudential is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding Progressive Corp and Prudential Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Prudential Financial 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 Prudential Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Prudential Financial has no effect on the direction of Progressive Corp i.e., Progressive Corp and Prudential Financial go up and down completely randomly.

Pair Corralation between Progressive Corp and Prudential Financial

Considering the 90-day investment horizon Progressive Corp is expected to generate 0.86 times more return on investment than Prudential Financial. However, Progressive Corp is 1.16 times less risky than Prudential Financial. It trades about 0.08 of its potential returns per unit of risk. Prudential Financial is currently generating about -0.11 per unit of risk. If you would invest  11,223  in Progressive Corp on April 3, 2022 and sell it today you would earn a total of  625.00  from holding Progressive Corp or generate 5.57% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Progressive Corp  vs.  Prudential Financial

 Performance (%) 
      Timeline 
Progressive Corp 
Progressive Performance
3 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Progressive Corp are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable technical and fundamental indicators, Progressive Corp is not utilizing all of its potentials. The new stock price agitation, may contribute to short-term losses for the retail investors.

Structure and Payout Changes

Forward Annual Dividend Yield
0.0035
Payout Ratio
0.63
Last Split Factor
4:1
Forward Annual Dividend Rate
0.4
Dividend Date
2022-07-15
Ex Dividend Date
2022-07-06
Last Split Date
2006-05-19

Progressive Price Channel

Prudential Financial 
Prudential Performance
0 of 100
Over the last 90 days Prudential Financial has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in August 2022. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Structure and Payout Changes

Forward Annual Dividend Yield
0.0498
Payout Ratio
0.34
Forward Annual Dividend Rate
4.8
Dividend Date
2022-06-16
Ex Dividend Date
2022-05-23

Prudential Price Channel

Progressive Corp and Prudential Financial Volatility Contrast

 Predicted Return Density 
      Returns 

Pair Trading with Progressive Corp and Prudential Financial

The main advantage of trading using opposite Progressive Corp and Prudential Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Progressive Corp position performs unexpectedly, Prudential 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 Prudential Financial will offset losses from the drop in Prudential Financial's long position.
The idea behind Progressive Corp and Prudential Financial 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.
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 ETF Directory module to find actively traded Exchange Traded Funds (ETF) from around the world.

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