Correlation Between IShares Semiconductor and SEI Exchange

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

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

Diversification Opportunities for IShares Semiconductor and SEI Exchange

-0.39

Correlation Coefficient

IShares Semiconductor  SEI Exchange

Very good diversification

The 3 months correlation between IShares and SEI is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding iShares Semiconductor ETF and SEI Exchange Traded in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SEI Exchange Traded and IShares Semiconductor 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 iShares Semiconductor ETF are associated (or correlated) with SEI Exchange. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SEI Exchange Traded has no effect on the direction of IShares Semiconductor i.e., IShares Semiconductor and SEI Exchange go up and down completely randomly.

Pair Corralation between IShares Semiconductor and SEI Exchange

Given the investment horizon of 90 days IShares Semiconductor is expected to generate 4.22 times less return on investment than SEI Exchange. In addition to that, IShares Semiconductor is 1.66 times more volatile than SEI Exchange Traded. It trades about 0.02 of its total potential returns per unit of risk. SEI Exchange Traded is currently generating about 0.12 per unit of volatility. If you would invest  3,716  in SEI Exchange Traded on October 22, 2024 and sell it today you would earn a total of  288.00  from holding SEI Exchange Traded or generate 7.75% return on investment over 90 days.

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

iShares Semiconductor ETF  vs.  SEI Exchange Traded

iShares Semiconductor ETF

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in iShares Semiconductor ETF are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong basic indicators, IShares Semiconductor is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

SEI Exchange Traded

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in SEI Exchange Traded are ranked lower than 9 (%) 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.

Pair Trading with IShares Semiconductor and SEI Exchange

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

The idea behind iShares Semiconductor ETF and SEI Exchange Traded 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.