Correlation Between Horizon Technology and SEI Investments

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

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

Diversification Opportunities for Horizon Technology and SEI Investments

-0.08

Correlation Coefficient

Horizon Technology  SEI Investments

Good diversification

The 3 months correlation between Horizon and SEI is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding Horizon Technology Finance and SEI Investments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SEI Investments and Horizon Technology 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 Horizon Technology Finance 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 Horizon Technology i.e., Horizon Technology and SEI Investments go up and down completely randomly.

Pair Corralation between Horizon Technology and SEI Investments

Given the investment horizon of 90 days Horizon Technology Finance is expected to generate 1.35 times more return on investment than SEI Investments. However, Horizon Technology is 1.35 times more volatile than SEI Investments. It trades about 0.07 of its potential returns per unit of risk. SEI Investments is currently generating about -0.07 per unit of risk. If you would invest  869.00  in Horizon Technology Finance on December 27, 2024 and sell it today you would earn a total of  61.00  from holding Horizon Technology Finance or generate 7.02% return on investment over 90 days.

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

Horizon Technology Finance  vs.  SEI Investments

Horizon Technology

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Horizon Technology Finance are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of very unsteady basic indicators, Horizon Technology may actually be approaching a critical reversion point that can send shares even higher in April 2025.

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 Horizon Technology and SEI Investments

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

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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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .