Correlation Between Pool and SEI Investments
Can any of the company-specific risk be diversified away by investing in both Pool 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 Pool and SEI Investments into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Pool Corporation and SEI Investments, you can compare the effects of market volatilities on Pool 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 Pool with a short position of SEI Investments. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pool and SEI Investments.
Diversification Opportunities for Pool and SEI Investments
0.47 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Pool and SEI is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Pool Corp. and SEI Investments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SEI Investments and Pool 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 Pool Corporation 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 Pool i.e., Pool and SEI Investments go up and down completely randomly.
Pair Corralation between Pool and SEI Investments
Given the investment horizon of 90 days Pool is expected to generate 2.85 times less return on investment than SEI Investments. In addition to that, Pool is 1.75 times more volatile than SEI Investments. It trades about 0.02 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 5,962 in SEI Investments on September 4, 2024 and sell it today you would earn a total of 2,208 from holding SEI Investments or generate 37.03% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Pool Corp. vs. SEI Investments
Performance |
| Timeline |
| Pool |
| SEI Investments |
Pool and SEI Investments Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pool and SEI Investments
The main advantage of trading using opposite Pool and SEI Investments positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pool 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 Pool Corporation 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
Other Complementary Tools
| Cryptocurrency Center Build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency | |
| Global Markets Map Get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes | |
| Portfolio Volatility Check portfolio volatility and analyze historical return density to properly model market risk | |
| Options Analysis Analyze and evaluate options and option chains as a potential hedge for your portfolios | |
| Pair Correlation Compare performance and examine fundamental relationship between any two equity instruments |