Correlation Between Air New and SEI INVESTMENTS
Can any of the company-specific risk be diversified away by investing in both Air New 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 Air New and SEI INVESTMENTS into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Air New Zealand and SEI INVESTMENTS, you can compare the effects of market volatilities on Air New 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 Air New with a short position of SEI INVESTMENTS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Air New and SEI INVESTMENTS.
Diversification Opportunities for Air New and SEI INVESTMENTS
0.13 | Correlation Coefficient |
Average diversification
The 3 months correlation between Air and SEI is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding Air New Zealand and SEI INVESTMENTS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SEI INVESTMENTS and Air New 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 Air New Zealand 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 Air New i.e., Air New and SEI INVESTMENTS go up and down completely randomly.
Pair Corralation between Air New and SEI INVESTMENTS
Assuming the 90 days trading horizon Air New Zealand is expected to under-perform the SEI INVESTMENTS. In addition to that, Air New is 1.78 times more volatile than SEI INVESTMENTS. It trades about -0.01 of its total potential returns per unit of risk. SEI INVESTMENTS is currently generating about 0.11 per unit of volatility. If you would invest 5,324 in SEI INVESTMENTS on August 31, 2024 and sell it today you would earn a total of 2,476 from holding SEI INVESTMENTS or generate 46.51% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Air New Zealand vs. SEI INVESTMENTS
Performance |
| Timeline |
| Air New Zealand |
| SEI INVESTMENTS |
Air New and SEI INVESTMENTS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Air New and SEI INVESTMENTS
The main advantage of trading using opposite Air New and SEI INVESTMENTS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Air New 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's long position.| Air New vs. SIVERS SEMICONDUCTORS AB | Air New vs. Darden Restaurants | Air New vs. Reliance Steel Aluminum | Air New vs. Q2M Managementberatung AG |
| SEI INVESTMENTS vs. SIVERS SEMICONDUCTORS AB | SEI INVESTMENTS vs. Darden Restaurants | SEI INVESTMENTS vs. Reliance Steel Aluminum | SEI INVESTMENTS vs. Q2M Managementberatung AG |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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