Correlation Between SPDR SP and SEI Exchange
Can any of the company-specific risk be diversified away by investing in both SPDR SP and SEI Exchange 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 SPDR SP and SEI Exchange into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SPDR SP 500 and SEI Exchange Traded, you can compare the effects of market volatilities on SPDR SP and SEI Exchange 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 SPDR SP with a short position of SEI Exchange. Check out your portfolio center. Please also check ongoing floating volatility patterns of SPDR SP and SEI Exchange.
Diversification Opportunities for SPDR SP and SEI Exchange
0.98 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between SPDR and SEI is 0.98. Overlapping area represents the amount of risk that can be diversified away by holding SPDR SP 500 and SEI Exchange Traded in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SEI Exchange Traded and SPDR SP 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 SPDR SP 500 are associated (or correlated) with SEI Exchange. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SEI Exchange Traded has no effect on the direction of SPDR SP i.e., SPDR SP and SEI Exchange go up and down completely randomly.
Pair Corralation between SPDR SP and SEI Exchange
Considering the 90-day investment horizon SPDR SP is expected to generate 1.71 times less return on investment than SEI Exchange. But when comparing it to its historical volatility, SPDR SP 500 is 1.29 times less risky than SEI Exchange. It trades about 0.14 of its potential returns per unit of risk. SEI Exchange Traded is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest 3,183 in SEI Exchange Traded on September 1, 2024 and sell it today you would earn a total of 859.00 from holding SEI Exchange Traded or generate 26.99% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 99.21% |
| Values | Daily Returns |
SPDR SP 500 vs. SEI Exchange Traded
Performance |
| Timeline |
| SPDR SP 500 |
| SEI Exchange Traded |
SPDR SP and SEI Exchange Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SPDR SP and SEI Exchange
The main advantage of trading using opposite SPDR SP and SEI Exchange positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SPDR SP position performs unexpectedly, SEI Exchange 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 SEI Exchange will offset losses from the drop in SEI Exchange's long position.| SPDR SP vs. Vanguard Total Stock | SPDR SP vs. Vanguard FTSE Emerging | SPDR SP vs. FT Vest Equity | SPDR SP vs. Zillow Group Class |
| SEI Exchange vs. SEI Exchange Traded | SEI Exchange vs. SEI Exchange Traded | SEI Exchange vs. SEI Exchange Traded | SEI Exchange vs. Listed Funds Trust |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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