Correlation Between Gap, and SEI Investments

Can any of the company-specific risk be diversified away by investing in both Gap, 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 Gap, and SEI Investments into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between The Gap, and SEI Investments, you can compare the effects of market volatilities on Gap, 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 Gap, with a short position of SEI Investments. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gap, and SEI Investments.

Diversification Opportunities for Gap, and SEI Investments

0.76

Correlation Coefficient

Gap,  SEI Investments

Poor diversification

The 3 months correlation between Gap, and SEI is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding The Gap, and SEI Investments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SEI Investments and Gap, 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 The Gap, 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 Gap, i.e., Gap, and SEI Investments go up and down completely randomly.

Pair Corralation between Gap, and SEI Investments

Considering the 90-day investment horizon The Gap, is expected to under-perform the SEI Investments. In addition to that, Gap, is 2.79 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  8,404  in SEI Investments on December 26, 2024 and sell it today you would lose (533.00) from holding SEI Investments or give up 6.34% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

The Gap,  vs.  SEI Investments

Gap,

Risk-Adjusted Performance

Very Weak

Over the last 90 days The Gap, has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest weak performance, the Stock's basic indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

SEI Investments

Risk-Adjusted Performance

Very Weak

Over the last 90 days SEI Investments has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound forward indicators, SEI Investments is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Gap, and SEI Investments

The main advantage of trading using opposite Gap, and SEI Investments positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gap, 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.

The idea behind The Gap, and SEI Investments 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.

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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.