Correlation Between Brown Brown and SEI Investments
Can any of the company-specific risk be diversified away by investing in both Brown Brown 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 Brown Brown and SEI Investments into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Brown Brown and SEI Investments, you can compare the effects of market volatilities on Brown Brown 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 Brown Brown with a short position of SEI Investments. Check out your portfolio center. Please also check ongoing floating volatility patterns of Brown Brown and SEI Investments.
Diversification Opportunities for Brown Brown and SEI Investments
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Brown and SEI is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Brown Brown and SEI Investments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SEI Investments and Brown Brown 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 Brown Brown 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 Brown Brown i.e., Brown Brown and SEI Investments go up and down completely randomly.
Pair Corralation between Brown Brown and SEI Investments
Considering the 90-day investment horizon Brown Brown is expected to generate 0.95 times more return on investment than SEI Investments. However, Brown Brown is 1.05 times less risky than SEI Investments. It trades about 0.15 of its potential returns per unit of risk. SEI Investments is currently generating about 0.09 per unit of risk. If you would invest 8,385 in Brown Brown on August 27, 2024 and sell it today you would earn a total of 2,820 from holding Brown Brown or generate 33.63% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Brown Brown vs. SEI Investments
Performance |
| Timeline |
| Brown Brown |
| SEI Investments |
Brown Brown and SEI Investments Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Brown Brown and SEI Investments
The main advantage of trading using opposite Brown Brown and SEI Investments positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Brown Brown 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.| Brown Brown vs. Marsh McLennan Companies | Brown Brown vs. Aon PLC | Brown Brown vs. Willis Towers Watson | Brown Brown vs. Erie Indemnity |
| SEI Investments vs. PowerUp Acquisition Corp | SEI Investments vs. Aurora Innovation | SEI Investments vs. HUMANA INC | SEI Investments vs. Aquagold International |
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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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