Correlation Between SEI Investments and Western Acquisition
Can any of the company-specific risk be diversified away by investing in both SEI Investments and Western Acquisition 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 Western Acquisition into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SEI Investments and Western Acquisition Ventures, you can compare the effects of market volatilities on SEI Investments and Western Acquisition 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 Western Acquisition. Check out your portfolio center. Please also check ongoing floating volatility patterns of SEI Investments and Western Acquisition.
Diversification Opportunities for SEI Investments and Western Acquisition
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between SEI and Western is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding SEI Investments and Western Acquisition Ventures in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Western Acquisition 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 Western Acquisition. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Western Acquisition has no effect on the direction of SEI Investments i.e., SEI Investments and Western Acquisition go up and down completely randomly.
Pair Corralation between SEI Investments and Western Acquisition
Given the investment horizon of 90 days SEI Investments is expected to generate 0.79 times more return on investment than Western Acquisition. However, SEI Investments is 1.27 times less risky than Western Acquisition. It trades about 0.12 of its potential returns per unit of risk. Western Acquisition Ventures is currently generating about 0.02 per unit of risk. If you would invest 5,784 in SEI Investments on August 26, 2024 and sell it today you would earn a total of 2,298 from holding SEI Investments or generate 39.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
SEI Investments vs. Western Acquisition Ventures
Performance |
| Timeline |
| SEI Investments |
| Western Acquisition |
SEI Investments and Western Acquisition Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SEI Investments and Western Acquisition
The main advantage of trading using opposite SEI Investments and Western Acquisition positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SEI Investments position performs unexpectedly, Western Acquisition 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 Western Acquisition will offset losses from the drop in Western Acquisition's long position.| SEI Investments vs. PowerUp Acquisition Corp | SEI Investments vs. Aurora Innovation | SEI Investments vs. HUMANA INC | SEI Investments vs. Aquagold International |
| Western Acquisition vs. PowerUp Acquisition Corp | Western Acquisition vs. Aurora Innovation | Western Acquisition vs. HUMANA INC | Western Acquisition 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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