Correlation Between UNITED UTILITIES and SEI INVESTMENTS
Can any of the company-specific risk be diversified away by investing in both UNITED UTILITIES 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 UNITED UTILITIES and SEI INVESTMENTS into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between UNITED UTILITIES GR and SEI INVESTMENTS, you can compare the effects of market volatilities on UNITED UTILITIES 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 UNITED UTILITIES with a short position of SEI INVESTMENTS. Check out your portfolio center. Please also check ongoing floating volatility patterns of UNITED UTILITIES and SEI INVESTMENTS.
Diversification Opportunities for UNITED UTILITIES and SEI INVESTMENTS
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between UNITED and SEI is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding UNITED UTILITIES GR and SEI INVESTMENTS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SEI INVESTMENTS and UNITED UTILITIES 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 UNITED UTILITIES GR 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 UNITED UTILITIES i.e., UNITED UTILITIES and SEI INVESTMENTS go up and down completely randomly.
Pair Corralation between UNITED UTILITIES and SEI INVESTMENTS
Assuming the 90 days trading horizon UNITED UTILITIES is expected to generate 1.26 times less return on investment than SEI INVESTMENTS. In addition to that, UNITED UTILITIES is 1.65 times more volatile than SEI INVESTMENTS. It trades about 0.04 of its total potential returns per unit of risk. SEI INVESTMENTS is currently generating about 0.08 per unit of volatility. If you would invest 5,624 in SEI INVESTMENTS on September 4, 2024 and sell it today you would earn a total of 2,176 from holding SEI INVESTMENTS or generate 38.69% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
UNITED UTILITIES GR vs. SEI INVESTMENTS
Performance |
| Timeline |
| UNITED UTILITIES |
| SEI INVESTMENTS |
UNITED UTILITIES and SEI INVESTMENTS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with UNITED UTILITIES and SEI INVESTMENTS
The main advantage of trading using opposite UNITED UTILITIES and SEI INVESTMENTS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if UNITED UTILITIES 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's long position.| UNITED UTILITIES vs. TOTAL GABON | UNITED UTILITIES vs. Walgreens Boots Alliance | UNITED UTILITIES vs. Peak Resources Limited |
| SEI INVESTMENTS vs. TOTAL GABON | SEI INVESTMENTS vs. Walgreens Boots Alliance | SEI INVESTMENTS vs. Peak Resources Limited |
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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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