Correlation Between SEI Exchange and 6 Meridian
Can any of the company-specific risk be diversified away by investing in both SEI Exchange and 6 Meridian 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 6 Meridian 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 6 Meridian Mega, you can compare the effects of market volatilities on SEI Exchange and 6 Meridian 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 6 Meridian. Check out your portfolio center. Please also check ongoing floating volatility patterns of SEI Exchange and 6 Meridian.
Diversification Opportunities for SEI Exchange and 6 Meridian
0.93 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between SEI and SIXA is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding SEI Exchange Traded and 6 Meridian Mega in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on 6 Meridian Mega 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 6 Meridian. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of 6 Meridian Mega has no effect on the direction of SEI Exchange i.e., SEI Exchange and 6 Meridian go up and down completely randomly.
Pair Corralation between SEI Exchange and 6 Meridian
Given the investment horizon of 90 days SEI Exchange Traded is expected to generate 1.11 times more return on investment than 6 Meridian. However, SEI Exchange is 1.11 times more volatile than 6 Meridian Mega. It trades about 0.31 of its potential returns per unit of risk. 6 Meridian Mega is currently generating about 0.2 per unit of risk. If you would invest 2,945 in SEI Exchange Traded on August 30, 2024 and sell it today you would earn a total of 138.00 from holding SEI Exchange Traded or generate 4.69% 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. 6 Meridian Mega
Performance |
| Timeline |
| SEI Exchange Traded |
| 6 Meridian Mega |
SEI Exchange and 6 Meridian Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SEI Exchange and 6 Meridian
The main advantage of trading using opposite SEI Exchange and 6 Meridian positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SEI Exchange position performs unexpectedly, 6 Meridian 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 6 Meridian will offset losses from the drop in 6 Meridian's long position.The idea behind SEI Exchange Traded and 6 Meridian Mega pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| 6 Meridian vs. 6 Meridian Low | 6 Meridian vs. ETC 6 Meridian | 6 Meridian vs. 6 Meridian Small | 6 Meridian vs. Day HaganNed Davis |
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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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