Correlation Between SEI Investments and Xsabx

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

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

Diversification Opportunities for SEI Investments and Xsabx

0.6

Correlation Coefficient

SEI Investments  Xsabx

Poor diversification

The 3 months correlation between SEI and Xsabx is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding SEI Investments and Xsabx in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xsabx 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 Xsabx. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Xsabx has no effect on the direction of SEI Investments i.e., SEI Investments and Xsabx go up and down completely randomly.

Pair Corralation between SEI Investments and Xsabx

Given the investment horizon of 90 days SEI Investments is expected to generate 1.79 times more return on investment than Xsabx. However, SEI Investments is 1.79 times more volatile than Xsabx. It trades about 0.01 of its potential returns per unit of risk. Xsabx is currently generating about -0.03 per unit of risk. If you would invest  8,245  in SEI Investments on October 5, 2024 and sell it today you would earn a total of  3.00  from holding SEI Investments or generate 0.04% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	95.24%
Values	Daily Returns

SEI Investments  vs.  Xsabx

SEI Investments

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in SEI Investments are ranked lower than 16 (%) 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.

Xsabx

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Xsabx are ranked lower than 10 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong fundamental drivers, Xsabx is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with SEI Investments and Xsabx

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

The idea behind SEI Investments and Xsabx 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.

Check out your portfolio center.

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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.