Correlation Between Capital Income and SEI Investments
Can any of the company-specific risk be diversified away by investing in both Capital Income 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 Capital Income and SEI Investments into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Capital Income Builder and SEI Investments, you can compare the effects of market volatilities on Capital Income 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 Capital Income with a short position of SEI Investments. Check out your portfolio center. Please also check ongoing floating volatility patterns of Capital Income and SEI Investments.
Diversification Opportunities for Capital Income and SEI Investments
0.22 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Capital and SEI is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Capital Income Builder and SEI Investments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SEI Investments and Capital Income 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 Capital Income Builder 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 Capital Income i.e., Capital Income and SEI Investments go up and down completely randomly.
Pair Corralation between Capital Income and SEI Investments
Assuming the 90 days horizon Capital Income Builder is expected to generate 0.31 times more return on investment than SEI Investments. However, Capital Income Builder is 3.2 times less risky than SEI Investments. It trades about 0.28 of its potential returns per unit of risk. SEI Investments is currently generating about -0.15 per unit of risk. If you would invest 7,082 in Capital Income Builder on November 27, 2024 and sell it today you would earn a total of 163.00 from holding Capital Income Builder or generate 2.3% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Capital Income Builder vs. SEI Investments
Performance |
| Timeline |
| Capital Income Builder |
| SEI Investments |
Capital Income and SEI Investments Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Capital Income and SEI Investments
The main advantage of trading using opposite Capital Income and SEI Investments positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Capital Income 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.| Capital Income vs. Goldman Sachs Small | Capital Income vs. Ashmore Emerging Markets | Capital Income vs. Transamerica International Small | Capital Income vs. Franklin Small Cap |
| 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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