Correlation Between State Street and SEI Investments
Can any of the company-specific risk be diversified away by investing in both State Street and SEI Investments 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 State Street and SEI Investments into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between State Street Corp and SEI Investments, you can compare the effects of market volatilities on State Street and SEI Investments 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 State Street with a short position of SEI Investments. Check out your portfolio center. Please also check ongoing floating volatility patterns of State Street and SEI Investments.
Diversification Opportunities for State Street and SEI Investments
0.93 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between State and SEI is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding State Street Corp and SEI Investments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SEI Investments and State Street 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 State Street Corp are associated (or correlated) with SEI Investments. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SEI Investments has no effect on the direction of State Street i.e., State Street and SEI Investments go up and down completely randomly.
Pair Corralation between State Street and SEI Investments
Considering the 90-day investment horizon State Street Corp is expected to generate 1.52 times more return on investment than SEI Investments. However, State Street is 1.52 times more volatile than SEI Investments. It trades about 0.04 of its potential returns per unit of risk. SEI Investments is currently generating about 0.06 per unit of risk. If you would invest 7,100 in State Street Corp on August 24, 2024 and sell it today you would earn a total of 2,534 from holding State Street Corp or generate 35.69% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
State Street Corp vs. SEI Investments
Performance |
| Timeline |
| State Street Corp |
| SEI Investments |
State Street and SEI Investments Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with State Street and SEI Investments
The main advantage of trading using opposite State Street and SEI Investments positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if State Street position performs unexpectedly, SEI Investments 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 Investments will offset losses from the drop in SEI Investments' long position.| State Street vs. Northern Trust | State Street vs. Franklin Resources | State Street vs. Invesco Plc | State Street vs. T Rowe Price |
| SEI Investments vs. Commerce Bancshares | SEI Investments vs. RLI Corp | SEI Investments vs. Westamerica Bancorporation | SEI Investments vs. Brown Brown |
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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
Other Complementary Tools
| Options Analysis Analyze and evaluate options and option chains as a potential hedge for your portfolios | |
| Pattern Recognition Use different Pattern Recognition models to time the market across multiple global exchanges | |
| Odds Of Bankruptcy Get analysis of equity chance of financial distress in the next 2 years | |
| Price Ceiling Movement Calculate and plot Price Ceiling Movement for different equity instruments | |
| Theme Ratings Determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance |