Correlation Between Dow Jones and SEI Select
Can any of the company-specific risk be diversified away by investing in both Dow Jones and SEI Select 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 Dow Jones and SEI Select into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dow Jones Industrial and SEI Select Emerging, you can compare the effects of market volatilities on Dow Jones and SEI Select 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 Dow Jones with a short position of SEI Select. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and SEI Select.
Diversification Opportunities for Dow Jones and SEI Select
0.47 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Dow and SEI is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and SEI Select Emerging in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SEI Select Emerging and Dow Jones 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 Dow Jones Industrial are associated (or correlated) with SEI Select. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SEI Select Emerging has no effect on the direction of Dow Jones i.e., Dow Jones and SEI Select go up and down completely randomly.
Pair Corralation between Dow Jones and SEI Select
Assuming the 90 days trading horizon Dow Jones Industrial is expected to generate 0.79 times more return on investment than SEI Select. However, Dow Jones Industrial is 1.27 times less risky than SEI Select. It trades about 0.33 of its potential returns per unit of risk. SEI Select Emerging is currently generating about 0.2 per unit of risk. If you would invest 4,263,520 in Dow Jones Industrial on November 9, 2024 and sell it today you would earn a total of 211,243 from holding Dow Jones Industrial or generate 4.95% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.24% |
| Values | Daily Returns |
Dow Jones Industrial vs. SEI Select Emerging
Performance |
| Timeline |
Dow Jones and SEI Select Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
SEI Select Emerging
Pair trading matchups for SEI Select
Pair Trading with Dow Jones and SEI Select
The main advantage of trading using opposite Dow Jones and SEI Select positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, SEI Select 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 Select will offset losses from the drop in SEI Select's long position.| Dow Jones vs. Douglas Emmett | Dow Jones vs. Todos Medical | Dow Jones vs. Eastern Co | Dow Jones vs. Merit Medical Systems |
| SEI Select vs. Freedom Day Dividend | SEI Select vs. Franklin Templeton ETF | SEI Select vs. iShares MSCI China | SEI Select vs. Tidal Trust II |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
Other Complementary Tools
| Sync Your Broker Sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors. | |
| Pair Correlation Compare performance and examine fundamental relationship between any two equity instruments | |
| Idea Analyzer Analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas | |
| Portfolio Manager State of the art Portfolio Manager to monitor and improve performance of your invested capital | |
| ETFs Find actively traded Exchange Traded Funds (ETF) from around the world |