Correlation Between GM and SEI Select
Can any of the company-specific risk be diversified away by investing in both GM 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 GM and SEI Select into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Motors and SEI Select Emerging, you can compare the effects of market volatilities on GM 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 GM with a short position of SEI Select. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and SEI Select.
Diversification Opportunities for GM and SEI Select
-0.11 | Correlation Coefficient |
Good diversification
The 3 months correlation between GM and SEI is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding General Motors 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 GM 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 General Motors 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 GM i.e., GM and SEI Select go up and down completely randomly.
Pair Corralation between GM and SEI Select
Allowing for the 90-day total investment horizon General Motors is expected to under-perform the SEI Select. In addition to that, GM is 3.04 times more volatile than SEI Select Emerging. It trades about -0.09 of its total potential returns per unit of risk. SEI Select Emerging is currently generating about 0.2 per unit of volatility. If you would invest 2,332 in SEI Select Emerging on November 9, 2024 and sell it today you would earn a total of 94.00 from holding SEI Select Emerging or generate 4.03% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.24% |
| Values | Daily Returns |
General Motors vs. SEI Select Emerging
Performance |
| Timeline |
| General Motors |
| SEI Select Emerging |
GM and SEI Select Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and SEI Select
The main advantage of trading using opposite GM and SEI Select positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM 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.The idea behind General Motors and SEI Select Emerging 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 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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