Correlation Between IShares Core and SEI Exchange

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

By analyzing existing cross correlation between iShares Core SP and SEI Exchange Traded, you can compare the effects of market volatilities on IShares Core and SEI Exchange 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 IShares Core with a short position of SEI Exchange. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Core and SEI Exchange.

Diversification Opportunities for IShares Core and SEI Exchange

0.79

Correlation Coefficient

IShares Core  SEI Exchange

Poor diversification

The 3 months correlation between IShares and SEI is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding iShares Core SP and SEI Exchange Traded in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SEI Exchange Traded and IShares Core 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 iShares Core SP are associated (or correlated) with SEI Exchange. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SEI Exchange Traded has no effect on the direction of IShares Core i.e., IShares Core and SEI Exchange go up and down completely randomly.

Pair Corralation between IShares Core and SEI Exchange

Given the investment horizon of 90 days IShares Core is expected to generate 1.35 times less return on investment than SEI Exchange. But when comparing it to its historical volatility, iShares Core SP is 1.17 times less risky than SEI Exchange. It trades about 0.09 of its potential returns per unit of risk. SEI Exchange Traded is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  2,685  in SEI Exchange Traded on October 5, 2024 and sell it today you would earn a total of  621.00  from holding SEI Exchange Traded or generate 23.13% return on investment over 90 days.

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

iShares Core SP  vs.  SEI Exchange Traded

iShares Core SP

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days iShares Core SP has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, IShares Core is not utilizing all of its potentials. The current stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

SEI Exchange Traded

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in SEI Exchange Traded are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable forward indicators, SEI Exchange is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with IShares Core and SEI Exchange

The main advantage of trading using opposite IShares Core and SEI Exchange positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares Core position performs unexpectedly, SEI Exchange 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 Exchange will offset losses from the drop in SEI Exchange's long position.

The idea behind iShares Core SP and SEI Exchange Traded 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.