Correlation Between SEI INVESTMENTS and DNB BANK

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

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

Diversification Opportunities for SEI INVESTMENTS and DNB BANK

0.05

Correlation Coefficient

SEI INVESTMENTS  DNB BANK

Significant diversification

The 3 months correlation between SEI and DNB is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding SEI INVESTMENTS and DNB BANK ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DNB BANK ASA 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 DNB BANK. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DNB BANK ASA has no effect on the direction of SEI INVESTMENTS i.e., SEI INVESTMENTS and DNB BANK go up and down completely randomly.

Pair Corralation between SEI INVESTMENTS and DNB BANK

Assuming the 90 days trading horizon SEI INVESTMENTS is expected to generate 3.2 times less return on investment than DNB BANK. In addition to that, SEI INVESTMENTS is 1.2 times more volatile than DNB BANK ASA. It trades about 0.13 of its total potential returns per unit of risk. DNB BANK ASA is currently generating about 0.48 per unit of volatility. If you would invest  1,892  in DNB BANK ASA on October 22, 2024 and sell it today you would earn a total of  119.00  from holding DNB BANK ASA or generate 6.29% return on investment over 90 days.

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

SEI INVESTMENTS  vs.  DNB BANK ASA

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 comparatively uncertain basic indicators, SEI INVESTMENTS unveiled solid returns over the last few months and may actually be approaching a breakup point.

DNB BANK ASA

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in DNB BANK ASA are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, DNB BANK is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with SEI INVESTMENTS and DNB BANK

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

The idea behind SEI INVESTMENTS and DNB BANK ASA 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .