Correlation Between SEI INVESTMENTS and Scottish Mortgage

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

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

Diversification Opportunities for SEI INVESTMENTS and Scottish Mortgage

0.96

Correlation Coefficient

SEI INVESTMENTS  Scottish Mortgage

Almost no diversification

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

Pair Corralation between SEI INVESTMENTS and Scottish Mortgage

Assuming the 90 days trading horizon SEI INVESTMENTS is expected to generate 1.83 times more return on investment than Scottish Mortgage. However, SEI INVESTMENTS is 1.83 times more volatile than Scottish Mortgage Investment. It trades about 0.06 of its potential returns per unit of risk. Scottish Mortgage Investment is currently generating about -0.06 per unit of risk. If you would invest  7,852  in SEI INVESTMENTS on October 9, 2024 and sell it today you would earn a total of  98.00  from holding SEI INVESTMENTS or generate 1.25% return on investment over 90 days.

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

SEI INVESTMENTS  vs.  Scottish Mortgage Investment

SEI INVESTMENTS

Risk-Adjusted Performance

21 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in SEI INVESTMENTS are ranked lower than 21 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, SEI INVESTMENTS unveiled solid returns over the last few months and may actually be approaching a breakup point.

Scottish Mortgage

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Scottish Mortgage Investment are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Scottish Mortgage reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with SEI INVESTMENTS and Scottish Mortgage

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

The idea behind SEI INVESTMENTS and Scottish Mortgage Investment 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.