Correlation Between SEI Investments and Columbia Sportswear

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

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

Diversification Opportunities for SEI Investments and Columbia Sportswear

0.76

Correlation Coefficient

SEI Investments  Columbia Sportswear

Poor diversification

The 3 months correlation between SEI and Columbia is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding SEI Investments and Columbia Sportswear in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Columbia Sportswear 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 Columbia Sportswear. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Columbia Sportswear has no effect on the direction of SEI Investments i.e., SEI Investments and Columbia Sportswear go up and down completely randomly.

Pair Corralation between SEI Investments and Columbia Sportswear

Given the investment horizon of 90 days SEI Investments is expected to generate 0.75 times more return on investment than Columbia Sportswear. However, SEI Investments is 1.33 times less risky than Columbia Sportswear. It trades about 0.06 of its potential returns per unit of risk. Columbia Sportswear is currently generating about 0.0 per unit of risk. If you would invest  6,040  in SEI Investments on October 11, 2024 and sell it today you would earn a total of  2,108  from holding SEI Investments or generate 34.9% return on investment over 90 days.

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

SEI Investments  vs.  Columbia Sportswear

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.

Columbia Sportswear

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Columbia Sportswear are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy essential indicators, Columbia Sportswear is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with SEI Investments and Columbia Sportswear

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

The idea behind SEI Investments and Columbia Sportswear 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.