Correlation Between SEI Investments and CVW CleanTech

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

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

Diversification Opportunities for SEI Investments and CVW CleanTech

0.15

Correlation Coefficient

SEI Investments  CVW CleanTech

Average diversification

The 3 months correlation between SEI and CVW is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding SEI Investments and CVW CleanTech in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CVW CleanTech 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 CVW CleanTech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CVW CleanTech has no effect on the direction of SEI Investments i.e., SEI Investments and CVW CleanTech go up and down completely randomly.

Pair Corralation between SEI Investments and CVW CleanTech

Given the investment horizon of 90 days SEI Investments is expected to generate 4.1 times less return on investment than CVW CleanTech. But when comparing it to its historical volatility, SEI Investments is 7.81 times less risky than CVW CleanTech. It trades about 0.06 of its potential returns per unit of risk. CVW CleanTech is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  75.00  in CVW CleanTech on October 24, 2024 and sell it today you would lose (17.00) from holding CVW CleanTech or give up 22.67% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	99.8%
Values	Daily Returns

SEI Investments  vs.  CVW CleanTech

SEI Investments

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in SEI Investments are ranked lower than 12 (%) 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.

CVW CleanTech

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CVW CleanTech has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's technical and fundamental indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with SEI Investments and CVW CleanTech

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

The idea behind SEI Investments and CVW CleanTech 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.