Correlation Between SEI Investments and MPLX LP

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

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

Diversification Opportunities for SEI Investments and MPLX LP

-0.31

Correlation Coefficient

SEI Investments  MPLX LP

Very good diversification

The 3 months correlation between SEI and MPLX is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding SEI Investments and MPLX LP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MPLX LP 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 MPLX LP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MPLX LP has no effect on the direction of SEI Investments i.e., SEI Investments and MPLX LP go up and down completely randomly.

Pair Corralation between SEI Investments and MPLX LP

Given the investment horizon of 90 days SEI Investments is expected to under-perform the MPLX LP. But the stock apears to be less risky and, when comparing its historical volatility, SEI Investments is 1.01 times less risky than MPLX LP. The stock trades about -0.08 of its potential returns per unit of risk. The MPLX LP is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest  4,676  in MPLX LP on December 26, 2024 and sell it today you would earn a total of  660.00  from holding MPLX LP or generate 14.11% return on investment over 90 days.

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

SEI Investments  vs.  MPLX LP

SEI Investments

Risk-Adjusted Performance

Very Weak

Over the last 90 days SEI Investments has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest inconsistent performance, the Stock's forward indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

MPLX LP

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in MPLX LP are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unsteady essential indicators, MPLX LP showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with SEI Investments and MPLX LP

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

The idea behind SEI Investments and MPLX LP 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.