Correlation Between SEI Investments and Focus Financial
Can any of the company-specific risk be diversified away by investing in both SEI Investments and Focus 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 Focus 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 Focus Financial Partners, you can compare the effects of market volatilities on SEI Investments and Focus 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 Focus Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of SEI Investments and Focus Financial.
Diversification Opportunities for SEI Investments and Focus Financial
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between SEI and Focus is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding SEI Investments and Focus Financial Partners in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Focus Financial Partners 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 Focus Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Focus Financial Partners has no effect on the direction of SEI Investments i.e., SEI Investments and Focus Financial go up and down completely randomly.
Pair Corralation between SEI Investments and Focus Financial
Given the investment horizon of 90 days SEI Investments is expected to generate 3.47 times less return on investment than Focus Financial. But when comparing it to its historical volatility, SEI Investments is 1.14 times less risky than Focus Financial. It trades about 0.06 of its potential returns per unit of risk. Focus Financial Partners is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest 3,675 in Focus Financial Partners on August 27, 2024 and sell it today you would earn a total of 1,541 from holding Focus Financial Partners or generate 41.93% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 31.85% |
| Values | Daily Returns |
SEI Investments vs. Focus Financial Partners
Performance |
| Timeline |
| SEI Investments |
| Focus Financial Partners |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
SEI Investments and Focus Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SEI Investments and Focus Financial
The main advantage of trading using opposite SEI Investments and Focus Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SEI Investments position performs unexpectedly, Focus 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 Focus Financial will offset losses from the drop in Focus Financial's long position.| SEI Investments vs. Commerce Bancshares | SEI Investments vs. RLI Corp | SEI Investments vs. Westamerica Bancorporation | SEI Investments vs. Brown Brown |
| Focus Financial vs. Federated Premier Municipal | Focus Financial vs. Blackrock Muniyield | Focus Financial vs. Diamond Hill Investment | Focus Financial vs. NXG NextGen Infrastructure |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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