Correlation Between CEZ A and SEI Investments
Can any of the company-specific risk be diversified away by investing in both CEZ A 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 CEZ A and SEI Investments into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CEZ A S and SEI Investments, you can compare the effects of market volatilities on CEZ A 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 CEZ A with a short position of SEI Investments. Check out your portfolio center. Please also check ongoing floating volatility patterns of CEZ A and SEI Investments.
Diversification Opportunities for CEZ A and SEI Investments
-0.42 | Correlation Coefficient |
Very good diversification
The 3 months correlation between CEZ and SEI is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding CEZ A S and SEI Investments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SEI Investments and CEZ A 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 CEZ A S 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 CEZ A i.e., CEZ A and SEI Investments go up and down completely randomly.
Pair Corralation between CEZ A and SEI Investments
Assuming the 90 days horizon CEZ A S is expected to under-perform the SEI Investments. In addition to that, CEZ A is 1.32 times more volatile than SEI Investments. It trades about -0.09 of its total potential returns per unit of risk. SEI Investments is currently generating about 0.12 per unit of volatility. If you would invest 5,939 in SEI Investments on September 3, 2024 and sell it today you would earn a total of 2,253 from holding SEI Investments or generate 37.94% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 55.87% |
| Values | Daily Returns |
CEZ A S vs. SEI Investments
Performance |
| Timeline |
| CEZ A S |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| SEI Investments |
CEZ A and SEI Investments Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CEZ A and SEI Investments
The main advantage of trading using opposite CEZ A and SEI Investments positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CEZ A 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.The idea behind CEZ A S and SEI Investments 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.| 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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