Correlation Between Main Street and SEI Investments
Can any of the company-specific risk be diversified away by investing in both Main Street 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 Main Street and SEI Investments into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Main Street Capital and SEI Investments, you can compare the effects of market volatilities on Main Street 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 Main Street with a short position of SEI Investments. Check out your portfolio center. Please also check ongoing floating volatility patterns of Main Street and SEI Investments.
Diversification Opportunities for Main Street and SEI Investments
0.9 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Main and SEI is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Main Street Capital and SEI Investments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SEI Investments and Main Street 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 Main Street Capital 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 Main Street i.e., Main Street and SEI Investments go up and down completely randomly.
Pair Corralation between Main Street and SEI Investments
Given the investment horizon of 90 days Main Street Capital is expected to generate 0.62 times more return on investment than SEI Investments. However, Main Street Capital is 1.6 times less risky than SEI Investments. It trades about 0.47 of its potential returns per unit of risk. SEI Investments is currently generating about 0.27 per unit of risk. If you would invest 5,217 in Main Street Capital on September 12, 2024 and sell it today you would earn a total of 279.50 from holding Main Street Capital or generate 5.36% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Main Street Capital vs. SEI Investments
Performance |
| Timeline |
| Main Street Capital |
| SEI Investments |
Main Street and SEI Investments Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Main Street and SEI Investments
The main advantage of trading using opposite Main Street and SEI Investments positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Main Street 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.| Main Street vs. Gladstone Capital | Main Street vs. PennantPark Floating Rate | Main Street vs. Horizon Technology Finance | Main Street vs. Prospect Capital |
| SEI Investments vs. Stellus Capital Investment | SEI Investments vs. Prospect Capital | SEI Investments vs. Gladstone Capital | SEI Investments vs. Main Street Capital |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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