Correlation Between SEI Investments and KINDER

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

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

Diversification Opportunities for SEI Investments and KINDER

-0.34

Correlation Coefficient

SEI Investments  KINDER

Very good diversification

The 3 months correlation between SEI and KINDER is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding SEI Investments and KINDER MORGAN ENERGY in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KINDER MORGAN ENERGY 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 KINDER. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KINDER MORGAN ENERGY has no effect on the direction of SEI Investments i.e., SEI Investments and KINDER go up and down completely randomly.

Pair Corralation between SEI Investments and KINDER

Given the investment horizon of 90 days SEI Investments is expected to under-perform the KINDER. But the stock apears to be less risky and, when comparing its historical volatility, SEI Investments is 1.15 times less risky than KINDER. The stock trades about -0.1 of its potential returns per unit of risk. The KINDER MORGAN ENERGY is currently generating about -0.09 of returns per unit of risk over similar time horizon. If you would invest  10,381  in KINDER MORGAN ENERGY on December 21, 2024 and sell it today you would lose (694.00) from holding KINDER MORGAN ENERGY or give up 6.69% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	81.67%
Values	Daily Returns

SEI Investments  vs.  KINDER MORGAN ENERGY

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.

KINDER MORGAN ENERGY

Risk-Adjusted Performance

Very Weak

Over the last 90 days KINDER MORGAN ENERGY has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unfluctuating performance, the Bond's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for KINDER MORGAN ENERGY investors.

Pair Trading with SEI Investments and KINDER

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

The idea behind SEI Investments and KINDER MORGAN ENERGY 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.