Correlation Between DWS Municipal and SEI Investments
Can any of the company-specific risk be diversified away by investing in both DWS Municipal 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 DWS Municipal and SEI Investments into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between DWS Municipal Income and SEI Investments, you can compare the effects of market volatilities on DWS Municipal 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 DWS Municipal with a short position of SEI Investments. Check out your portfolio center. Please also check ongoing floating volatility patterns of DWS Municipal and SEI Investments.
Diversification Opportunities for DWS Municipal and SEI Investments
0.37 | Correlation Coefficient |
Weak diversification
The 3 months correlation between DWS and SEI is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding DWS Municipal Income and SEI Investments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SEI Investments and DWS Municipal 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 DWS Municipal Income 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 DWS Municipal i.e., DWS Municipal and SEI Investments go up and down completely randomly.
Pair Corralation between DWS Municipal and SEI Investments
Considering the 90-day investment horizon DWS Municipal is expected to generate 2.06 times less return on investment than SEI Investments. But when comparing it to its historical volatility, DWS Municipal Income is 2.49 times less risky than SEI Investments. It trades about 0.15 of its potential returns per unit of risk. SEI Investments is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 6,645 in SEI Investments on August 24, 2024 and sell it today you would earn a total of 1,371 from holding SEI Investments or generate 20.63% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
DWS Municipal Income vs. SEI Investments
Performance |
| Timeline |
| DWS Municipal Income |
| SEI Investments |
DWS Municipal and SEI Investments Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with DWS Municipal and SEI Investments
The main advantage of trading using opposite DWS Municipal and SEI Investments positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DWS Municipal 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.| DWS Municipal vs. Pioneer Floating Rate | DWS Municipal vs. The Gabelli Equity | DWS Municipal vs. Pioneer Municipal High | DWS Municipal vs. Nuveen Global High |
| 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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