Correlation Between ChampionX and SEI Investments

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

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

Diversification Opportunities for ChampionX and SEI Investments

0.26

Correlation Coefficient

ChampionX  SEI Investments

Modest diversification

The 3 months correlation between ChampionX and SEI is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding ChampionX and SEI Investments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SEI Investments and ChampionX 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 ChampionX are associated (or correlated) with SEI Investments. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SEI Investments has no effect on the direction of ChampionX i.e., ChampionX and SEI Investments go up and down completely randomly.

Pair Corralation between ChampionX and SEI Investments

Considering the 90-day investment horizon ChampionX is expected to generate 3.5 times less return on investment than SEI Investments. In addition to that, ChampionX is 1.66 times more volatile than SEI Investments. It trades about 0.05 of its total potential returns per unit of risk. SEI Investments is currently generating about 0.28 per unit of volatility. If you would invest  6,634  in SEI Investments on September 5, 2024 and sell it today you would earn a total of  1,536  from holding SEI Investments or generate 23.15% return on investment over 90 days.

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

ChampionX  vs.  SEI Investments

ChampionX

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in ChampionX are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong technical indicators, ChampionX is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

SEI Investments

Risk-Adjusted Performance

22 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in SEI Investments are ranked lower than 22 (%) of all global equities and portfolios over the last 90 days. In spite of rather abnormal forward indicators, SEI Investments exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with ChampionX and SEI Investments

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

The idea behind ChampionX and SEI Investments 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.