Correlation Between Nasdaq-100(r) and Sei Daily

Can any of the company-specific risk be diversified away by investing in both Nasdaq-100(r) and Sei Daily 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 Nasdaq-100(r) and Sei Daily into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Nasdaq 100 2x Strategy and Sei Daily Income, you can compare the effects of market volatilities on Nasdaq-100(r) and Sei Daily 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 Nasdaq-100(r) with a short position of Sei Daily. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nasdaq-100(r) and Sei Daily.

Diversification Opportunities for Nasdaq-100(r) and Sei Daily

0.0

Correlation Coefficient

Nasdaq-100(r)  Sei Daily

Pay attention - limited upside

The 3 months correlation between Nasdaq-100(r) and Sei is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Nasdaq 100 2x Strategy and Sei Daily Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sei Daily Income and Nasdaq-100(r) 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 Nasdaq 100 2x Strategy are associated (or correlated) with Sei Daily. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sei Daily Income has no effect on the direction of Nasdaq-100(r) i.e., Nasdaq-100(r) and Sei Daily go up and down completely randomly.

Pair Corralation between Nasdaq-100(r) and Sei Daily

Assuming the 90 days horizon Nasdaq-100(r) is expected to generate 3.03 times less return on investment than Sei Daily. But when comparing it to its historical volatility, Nasdaq 100 2x Strategy is 7.62 times less risky than Sei Daily. It trades about 0.09 of its potential returns per unit of risk. Sei Daily Income is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  92.00  in Sei Daily Income on October 25, 2024 and sell it today you would earn a total of  8.00  from holding Sei Daily Income or generate 8.7% return on investment over 90 days.

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

Nasdaq 100 2x Strategy  vs.  Sei Daily Income

Nasdaq 100 2x

Risk-Adjusted Performance

4 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Nasdaq 100 2x Strategy are ranked lower than 4 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Nasdaq-100(r) may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Sei Daily Income

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sei Daily Income has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Sei Daily is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Nasdaq-100(r) and Sei Daily

The main advantage of trading using opposite Nasdaq-100(r) and Sei Daily positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nasdaq-100(r) position performs unexpectedly, Sei Daily 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 Daily will offset losses from the drop in Sei Daily's long position.

The idea behind Nasdaq 100 2x Strategy and Sei Daily Income 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.