Correlation Between Park National and SEI Investments

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

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

Diversification Opportunities for Park National and SEI Investments

0.31

Correlation Coefficient

Park National  SEI Investments

Weak diversification

The 3 months correlation between Park and SEI is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Park National and SEI Investments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SEI Investments and Park National 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 Park National 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 Park National i.e., Park National and SEI Investments go up and down completely randomly.

Pair Corralation between Park National and SEI Investments

Considering the 90-day investment horizon Park National is expected to under-perform the SEI Investments. In addition to that, Park National is 1.3 times more volatile than SEI Investments. It trades about -0.24 of its total potential returns per unit of risk. SEI Investments is currently generating about 0.02 per unit of volatility. If you would invest  8,404  in SEI Investments on October 26, 2024 and sell it today you would earn a total of  22.00  from holding SEI Investments or generate 0.26% return on investment over 90 days.

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

Park National  vs.  SEI Investments

Park National

Risk-Adjusted Performance

0 of 100

Weak

Over the last 90 days Park National has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, Park National is not utilizing all of its potentials. The recent stock price mess, may contribute to short-term losses for the institutional investors.

SEI Investments

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in SEI Investments are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of rather inconsistent forward indicators, SEI Investments may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Park National and SEI Investments

The main advantage of trading using opposite Park National and SEI Investments positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Park National 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 Park National 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.