Correlation Between SEI INVESTMENTS and Microsoft
Can any of the company-specific risk be diversified away by investing in both SEI INVESTMENTS and Microsoft 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 Microsoft into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SEI INVESTMENTS and Microsoft, you can compare the effects of market volatilities on SEI INVESTMENTS and Microsoft 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 Microsoft. Check out your portfolio center. Please also check ongoing floating volatility patterns of SEI INVESTMENTS and Microsoft.
Diversification Opportunities for SEI INVESTMENTS and Microsoft
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between SEI and Microsoft is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding SEI INVESTMENTS and Microsoft in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Microsoft 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 Microsoft. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Microsoft has no effect on the direction of SEI INVESTMENTS i.e., SEI INVESTMENTS and Microsoft go up and down completely randomly.
Pair Corralation between SEI INVESTMENTS and Microsoft
Assuming the 90 days trading horizon SEI INVESTMENTS is expected to generate 0.72 times more return on investment than Microsoft. However, SEI INVESTMENTS is 1.38 times less risky than Microsoft. It trades about 0.16 of its potential returns per unit of risk. Microsoft is currently generating about 0.07 per unit of risk. If you would invest 5,022 in SEI INVESTMENTS on August 25, 2024 and sell it today you would earn a total of 2,578 from holding SEI INVESTMENTS or generate 51.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.64% |
| Values | Daily Returns |
SEI INVESTMENTS vs. Microsoft
Performance |
| Timeline |
| SEI INVESTMENTS |
| Microsoft |
SEI INVESTMENTS and Microsoft Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SEI INVESTMENTS and Microsoft
The main advantage of trading using opposite SEI INVESTMENTS and Microsoft positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SEI INVESTMENTS position performs unexpectedly, Microsoft 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 Microsoft will offset losses from the drop in Microsoft's long position.| SEI INVESTMENTS vs. Apple Inc | SEI INVESTMENTS vs. Apple Inc | SEI INVESTMENTS vs. Apple Inc | SEI INVESTMENTS vs. Apple Inc |
| Microsoft vs. PARKEN Sport Entertainment | Microsoft vs. WisdomTree Investments | Microsoft vs. AOYAMA TRADING | Microsoft vs. SEI INVESTMENTS |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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