Correlation Between First Trust and SEI Investments
Can any of the company-specific risk be diversified away by investing in both First Trust 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 First Trust and SEI Investments into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between First Trust Exchange Traded and SEI Investments, you can compare the effects of market volatilities on First Trust 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 First Trust with a short position of SEI Investments. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Trust and SEI Investments.
Diversification Opportunities for First Trust and SEI Investments
0.4 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between First and SEI is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding First Trust Exchange Traded and SEI Investments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SEI Investments and First Trust 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 First Trust Exchange Traded 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 First Trust i.e., First Trust and SEI Investments go up and down completely randomly.
Pair Corralation between First Trust and SEI Investments
Given the investment horizon of 90 days First Trust Exchange Traded is expected to generate 0.22 times more return on investment than SEI Investments. However, First Trust Exchange Traded is 4.53 times less risky than SEI Investments. It trades about 0.01 of its potential returns per unit of risk. SEI Investments is currently generating about -0.18 per unit of risk. If you would invest 3,765 in First Trust Exchange Traded on November 27, 2024 and sell it today you would earn a total of 2.00 from holding First Trust Exchange Traded or generate 0.05% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
First Trust Exchange Traded vs. SEI Investments
Performance |
| Timeline |
| First Trust Exchange |
| SEI Investments |
First Trust and SEI Investments Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Trust and SEI Investments
The main advantage of trading using opposite First Trust and SEI Investments positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Trust 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.| First Trust vs. First Trust Exchange | First Trust vs. First Trust Exchange Traded | First Trust vs. First Trust Exchange Traded | First Trust vs. FT Cboe Vest |
| 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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