Correlation Between Small Cap and SEI Investments
Can any of the company-specific risk be diversified away by investing in both Small Cap 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 Small Cap and SEI Investments into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Small Cap Core and SEI Investments, you can compare the effects of market volatilities on Small Cap 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 Small Cap with a short position of SEI Investments. Check out your portfolio center. Please also check ongoing floating volatility patterns of Small Cap and SEI Investments.
Diversification Opportunities for Small Cap and SEI Investments
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Small and SEI is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Small Cap Core and SEI Investments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SEI Investments and Small Cap 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 Small Cap Core 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 Small Cap i.e., Small Cap and SEI Investments go up and down completely randomly.
Pair Corralation between Small Cap and SEI Investments
Assuming the 90 days horizon Small Cap is expected to generate 1.31 times less return on investment than SEI Investments. In addition to that, Small Cap is 1.13 times more volatile than SEI Investments. It trades about 0.06 of its total potential returns per unit of risk. SEI Investments is currently generating about 0.09 per unit of volatility. If you would invest 6,678 in SEI Investments on August 27, 2024 and sell it today you would earn a total of 1,404 from holding SEI Investments or generate 21.02% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Small Cap Core vs. SEI Investments
Performance |
| Timeline |
| Small Cap Core |
| SEI Investments |
Small Cap and SEI Investments Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Small Cap and SEI Investments
The main advantage of trading using opposite Small Cap and SEI Investments positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Small Cap 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.| Small Cap vs. Pace High Yield | Small Cap vs. Needham Aggressive Growth | Small Cap vs. Metropolitan West High | Small Cap vs. Pioneer High Income |
| SEI Investments vs. PowerUp Acquisition Corp | SEI Investments vs. Aurora Innovation | SEI Investments vs. HUMANA INC | SEI Investments vs. Aquagold International |
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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
Other Complementary Tools
| Companies Directory Evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals | |
| Fundamentals Comparison Compare fundamentals across multiple equities to find investing opportunities | |
| Balance Of Power Check stock momentum by analyzing Balance Of Power indicator and other technical ratios | |
| Portfolio Holdings Check your current holdings and cash postion to detemine if your portfolio needs rebalancing | |
| Analyst Advice Analyst recommendations and target price estimates broken down by several categories |