Correlation Between SEI Exchange and ETF Series

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

By analyzing existing cross correlation between SEI Exchange Traded and ETF Series Solutions, you can compare the effects of market volatilities on SEI Exchange and ETF Series 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 Exchange with a short position of ETF Series. Check out your portfolio center. Please also check ongoing floating volatility patterns of SEI Exchange and ETF Series.

Diversification Opportunities for SEI Exchange and ETF Series

0.96

Correlation Coefficient

SEI Exchange  ETF Series

Almost no diversification

The 3 months correlation between SEI and ETF is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding SEI Exchange Traded and ETF Series Solutions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ETF Series Solutions and SEI Exchange 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 Exchange Traded are associated (or correlated) with ETF Series. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ETF Series Solutions has no effect on the direction of SEI Exchange i.e., SEI Exchange and ETF Series go up and down completely randomly.

Pair Corralation between SEI Exchange and ETF Series

Given the investment horizon of 90 days SEI Exchange is expected to generate 1.19 times less return on investment than ETF Series. But when comparing it to its historical volatility, SEI Exchange Traded is 1.2 times less risky than ETF Series. It trades about 0.17 of its potential returns per unit of risk. ETF Series Solutions is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest  3,579  in ETF Series Solutions on October 26, 2024 and sell it today you would earn a total of  498.00  from holding ETF Series Solutions or generate 13.91% return on investment over 90 days.

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

SEI Exchange Traded  vs.  ETF Series Solutions

SEI Exchange Traded

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in SEI Exchange Traded are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of very abnormal forward indicators, SEI Exchange may actually be approaching a critical reversion point that can send shares even higher in February 2025.

ETF Series Solutions

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in ETF Series Solutions are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of very inconsistent technical and fundamental indicators, ETF Series displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with SEI Exchange and ETF Series

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

The idea behind SEI Exchange Traded and ETF Series Solutions 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.