Correlation Between SEI Investments and Cincinnati Financial
Can any of the company-specific risk be diversified away by investing in both SEI Investments and Cincinnati Financial 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 SEI Investments and Cincinnati Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SEI Investments and Cincinnati Financial, you can compare the effects of market volatilities on SEI Investments and Cincinnati Financial 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 SEI Investments with a short position of Cincinnati Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of SEI Investments and Cincinnati Financial.
Diversification Opportunities for SEI Investments and Cincinnati Financial
0.93 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between SEI and Cincinnati is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding SEI Investments and Cincinnati Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cincinnati Financial and SEI Investments 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 SEI Investments are associated (or correlated) with Cincinnati Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cincinnati Financial has no effect on the direction of SEI Investments i.e., SEI Investments and Cincinnati Financial go up and down completely randomly.
Pair Corralation between SEI Investments and Cincinnati Financial
Given the investment horizon of 90 days SEI Investments is expected to generate 0.83 times more return on investment than Cincinnati Financial. However, SEI Investments is 1.2 times less risky than Cincinnati Financial. It trades about 0.35 of its potential returns per unit of risk. Cincinnati Financial is currently generating about 0.16 per unit of risk. If you would invest 7,114 in SEI Investments on September 13, 2024 and sell it today you would earn a total of 1,517 from holding SEI Investments or generate 21.32% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
SEI Investments vs. Cincinnati Financial
Performance |
| Timeline |
| SEI Investments |
| Cincinnati Financial |
SEI Investments and Cincinnati Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SEI Investments and Cincinnati Financial
The main advantage of trading using opposite SEI Investments and Cincinnati Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SEI Investments position performs unexpectedly, Cincinnati Financial 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 Cincinnati Financial will offset losses from the drop in Cincinnati Financial's long position.| SEI Investments vs. Commerce Bancshares | SEI Investments vs. RLI Corp | SEI Investments vs. Westamerica Bancorporation | SEI Investments vs. Brown Brown |
| Cincinnati Financial vs. Chubb | Cincinnati Financial vs. W R Berkley | Cincinnati Financial vs. The Allstate | Cincinnati Financial vs. Markel |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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