Correlation Between SEI Investments and Apartment Investment

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

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

Diversification Opportunities for SEI Investments and Apartment Investment

0.05

Correlation Coefficient

SEI Investments  Apartment Investment

Significant diversification

The 3 months correlation between SEI and Apartment is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding SEI Investments and Apartment Investment and in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Apartment Investment and and SEI Investments 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 SEI Investments are associated (or correlated) with Apartment Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Apartment Investment and has no effect on the direction of SEI Investments i.e., SEI Investments and Apartment Investment go up and down completely randomly.

Pair Corralation between SEI Investments and Apartment Investment

Given the investment horizon of 90 days SEI Investments is expected to under-perform the Apartment Investment. But the stock apears to be less risky and, when comparing its historical volatility, SEI Investments is 1.84 times less risky than Apartment Investment. The stock trades about -0.14 of its potential returns per unit of risk. The Apartment Investment and is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest  873.00  in Apartment Investment and on October 11, 2024 and sell it today you would lose (12.00) from holding Apartment Investment and or give up 1.37% of portfolio value over 90 days.

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

SEI Investments  vs.  Apartment Investment and

SEI Investments

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in SEI Investments are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of rather inconsistent forward indicators, SEI Investments exhibited solid returns over the last few months and may actually be approaching a breakup point.

Apartment Investment and

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Apartment Investment and has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable forward indicators, Apartment Investment 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 SEI Investments and Apartment Investment

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

The idea behind SEI Investments and Apartment Investment and 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.