Correlation Between SEI INVESTMENTS and STMicroelectronics
Can any of the company-specific risk be diversified away by investing in both SEI INVESTMENTS and STMicroelectronics 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 STMicroelectronics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SEI INVESTMENTS and STMicroelectronics NV, you can compare the effects of market volatilities on SEI INVESTMENTS and STMicroelectronics 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 STMicroelectronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of SEI INVESTMENTS and STMicroelectronics.
Diversification Opportunities for SEI INVESTMENTS and STMicroelectronics
-0.63 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between SEI and STMicroelectronics is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding SEI INVESTMENTS and STMicroelectronics NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on STMicroelectronics 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 STMicroelectronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of STMicroelectronics has no effect on the direction of SEI INVESTMENTS i.e., SEI INVESTMENTS and STMicroelectronics go up and down completely randomly.
Pair Corralation between SEI INVESTMENTS and STMicroelectronics
Assuming the 90 days trading horizon SEI INVESTMENTS is expected to generate 0.48 times more return on investment than STMicroelectronics. However, SEI INVESTMENTS is 2.09 times less risky than STMicroelectronics. It trades about 0.15 of its potential returns per unit of risk. STMicroelectronics NV is currently generating about -0.13 per unit of risk. If you would invest 6,154 in SEI INVESTMENTS on September 1, 2024 and sell it today you would earn a total of 1,646 from holding SEI INVESTMENTS or generate 26.75% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
SEI INVESTMENTS vs. STMicroelectronics NV
Performance |
| Timeline |
| SEI INVESTMENTS |
| STMicroelectronics |
SEI INVESTMENTS and STMicroelectronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SEI INVESTMENTS and STMicroelectronics
The main advantage of trading using opposite SEI INVESTMENTS and STMicroelectronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SEI INVESTMENTS position performs unexpectedly, STMicroelectronics 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 STMicroelectronics will offset losses from the drop in STMicroelectronics' long position.| SEI INVESTMENTS vs. EHEALTH | SEI INVESTMENTS vs. HEALTHCARE REAL A | SEI INVESTMENTS vs. NXP Semiconductors NV | SEI INVESTMENTS vs. Natural Health Trends |
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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 Stocks Directory module to find actively traded stocks across global markets.
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