Correlation Between Bank of New York and SEI Investments
Can any of the company-specific risk be diversified away by investing in both Bank of New York and SEI Investments 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 Bank of New York and SEI Investments into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bank of New and SEI Investments, you can compare the effects of market volatilities on Bank of New York and SEI Investments 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 Bank of New York with a short position of SEI Investments. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of New York and SEI Investments.
Diversification Opportunities for Bank of New York and SEI Investments
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Bank and SEI is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Bank of New and SEI Investments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SEI Investments and Bank of New York 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 Bank of New are associated (or correlated) with SEI Investments. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SEI Investments has no effect on the direction of Bank of New York i.e., Bank of New York and SEI Investments go up and down completely randomly.
Pair Corralation between Bank of New York and SEI Investments
Allowing for the 90-day total investment horizon Bank of New is expected to generate 1.43 times more return on investment than SEI Investments. However, Bank of New York is 1.43 times more volatile than SEI Investments. It trades about 0.27 of its potential returns per unit of risk. SEI Investments is currently generating about 0.19 per unit of risk. If you would invest 7,699 in Bank of New on November 3, 2024 and sell it today you would earn a total of 894.00 from holding Bank of New or generate 11.61% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bank of New vs. SEI Investments
Performance |
| Timeline |
| Bank of New York |
| SEI Investments |
Bank of New York and SEI Investments Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of New York and SEI Investments
The main advantage of trading using opposite Bank of New York and SEI Investments positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of New York position performs unexpectedly, SEI Investments 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 SEI Investments will offset losses from the drop in SEI Investments' long position.| Bank of New York vs. Northern Trust | Bank of New York vs. Invesco Plc | Bank of New York vs. Franklin Resources | Bank of New York vs. T Rowe Price |
| SEI Investments vs. Commerce Bancshares | SEI Investments vs. RLI Corp | SEI Investments vs. Westamerica Bancorporation | SEI Investments vs. Brown Brown |
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 the Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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