Correlation Between Catalent and SEI Investments

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

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

Diversification Opportunities for Catalent and SEI Investments

0.34

Correlation Coefficient

Catalent  SEI Investments

Weak diversification

The 3 months correlation between Catalent and SEI is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Catalent and SEI Investments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SEI Investments and Catalent 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 Catalent 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 Catalent i.e., Catalent and SEI Investments go up and down completely randomly.

Pair Corralation between Catalent and SEI Investments

Given the investment horizon of 90 days Catalent is expected to generate 0.93 times more return on investment than SEI Investments. However, Catalent is 1.07 times less risky than SEI Investments. It trades about 0.49 of its potential returns per unit of risk. SEI Investments is currently generating about 0.41 per unit of risk. If you would invest  5,878  in Catalent on September 17, 2024 and sell it today you would earn a total of  429.00  from holding Catalent or generate 7.3% return on investment over 90 days.

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

Catalent  vs.  SEI Investments

Catalent

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Catalent are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable essential indicators, Catalent is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

SEI Investments

Risk-Adjusted Performance

24 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in SEI Investments are ranked lower than 24 (%) of all global equities and portfolios over the last 90 days. In spite of rather inconsistent forward indicators, SEI Investments exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Catalent and SEI Investments

The main advantage of trading using opposite Catalent and SEI Investments positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Catalent 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 Catalent 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.

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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.