Correlation Between SEI Exchange and ETF Series
Can any of the company-specific risk be diversified away by investing in both SEI Exchange and ETF Series 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 Exchange and ETF Series into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SEI Exchange Traded and ETF Series Solutions, you can compare the effects of market volatilities on SEI Exchange and ETF Series 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 Exchange with a short position of ETF Series. Check out your portfolio center. Please also check ongoing floating volatility patterns of SEI Exchange and ETF Series.
Diversification Opportunities for SEI Exchange and ETF Series
0.99 | Correlation Coefficient |
No risk reduction
The 3 months correlation between SEI and ETF is 0.99. Overlapping area represents the amount of risk that can be diversified away by holding SEI Exchange Traded and ETF Series Solutions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ETF Series Solutions and SEI Exchange 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 Exchange Traded are associated (or correlated) with ETF Series. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ETF Series Solutions has no effect on the direction of SEI Exchange i.e., SEI Exchange and ETF Series go up and down completely randomly.
Pair Corralation between SEI Exchange and ETF Series
Given the investment horizon of 90 days SEI Exchange Traded is expected to generate 0.73 times more return on investment than ETF Series. However, SEI Exchange Traded is 1.38 times less risky than ETF Series. It trades about 0.15 of its potential returns per unit of risk. ETF Series Solutions is currently generating about 0.09 per unit of risk. If you would invest 2,599 in SEI Exchange Traded on September 3, 2024 and sell it today you would earn a total of 1,443 from holding SEI Exchange Traded or generate 55.52% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
SEI Exchange Traded vs. ETF Series Solutions
Performance |
| Timeline |
| SEI Exchange Traded |
| ETF Series Solutions |
SEI Exchange and ETF Series Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SEI Exchange and ETF Series
The main advantage of trading using opposite SEI Exchange and ETF Series positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SEI Exchange position performs unexpectedly, ETF Series 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 ETF Series will offset losses from the drop in ETF Series' long position.| SEI Exchange vs. SEI Exchange Traded | SEI Exchange vs. SEI Exchange Traded | SEI Exchange vs. SEI Exchange Traded | SEI Exchange vs. Listed Funds Trust |
| ETF Series vs. Vanguard Information Technology | ETF Series vs. Technology Select Sector | ETF Series vs. iShares Technology ETF | ETF Series vs. VanEck Semiconductor ETF |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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