Correlation Between SmartETFs Dividend and SEI Select

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Can any of the company-specific risk be diversified away by investing in both SmartETFs Dividend and SEI Select 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 SmartETFs Dividend and SEI Select into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SmartETFs Dividend Builder and SEI Select Emerging, you can compare the effects of market volatilities on SmartETFs Dividend and SEI Select 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 SmartETFs Dividend with a short position of SEI Select. Check out your portfolio center. Please also check ongoing floating volatility patterns of SmartETFs Dividend and SEI Select.

Diversification Opportunities for SmartETFs Dividend and SEI Select

0.86
  Correlation Coefficient

Very poor diversification

The 3 months correlation between SmartETFs and SEI is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding SmartETFs Dividend Builder and SEI Select Emerging in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SEI Select Emerging and SmartETFs Dividend 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 SmartETFs Dividend Builder are associated (or correlated) with SEI Select. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SEI Select Emerging has no effect on the direction of SmartETFs Dividend i.e., SmartETFs Dividend and SEI Select go up and down completely randomly.

Pair Corralation between SmartETFs Dividend and SEI Select

Given the investment horizon of 90 days SmartETFs Dividend Builder is expected to generate 0.99 times more return on investment than SEI Select. However, SmartETFs Dividend Builder is 1.01 times less risky than SEI Select. It trades about -0.12 of its potential returns per unit of risk. SEI Select Emerging is currently generating about -0.2 per unit of risk. If you would invest  2,899  in SmartETFs Dividend Builder on October 11, 2024 and sell it today you would lose (51.00) from holding SmartETFs Dividend Builder or give up 1.76% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthStrong
Accuracy100.0%
ValuesDaily Returns

SmartETFs Dividend Builder  vs.  SEI Select Emerging

 Performance 
       Timeline  
SmartETFs Dividend 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days SmartETFs Dividend Builder has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, SmartETFs Dividend is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.
SEI Select Emerging 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days SEI Select Emerging has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Etf's technical and fundamental indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the ETF investors.

SmartETFs Dividend and SEI Select Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with SmartETFs Dividend and SEI Select

The main advantage of trading using opposite SmartETFs Dividend and SEI Select positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SmartETFs Dividend position performs unexpectedly, SEI Select 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 Select will offset losses from the drop in SEI Select's long position.
The idea behind SmartETFs Dividend Builder and SEI Select Emerging pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.

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