Correlation Between Peloton Minerals and SEI Investments

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Can any of the company-specific risk be diversified away by investing in both Peloton Minerals 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 Peloton Minerals and SEI Investments into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Peloton Minerals and SEI Investments, you can compare the effects of market volatilities on Peloton Minerals 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 Peloton Minerals with a short position of SEI Investments. Check out your portfolio center. Please also check ongoing floating volatility patterns of Peloton Minerals and SEI Investments.

Diversification Opportunities for Peloton Minerals and SEI Investments

-0.36
  Correlation Coefficient

Very good diversification

The 3 months correlation between Peloton and SEI is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Peloton Minerals and SEI Investments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SEI Investments and Peloton Minerals 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 Peloton Minerals 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 Peloton Minerals i.e., Peloton Minerals and SEI Investments go up and down completely randomly.

Pair Corralation between Peloton Minerals and SEI Investments

Assuming the 90 days horizon Peloton Minerals is expected to generate 2.09 times less return on investment than SEI Investments. In addition to that, Peloton Minerals is 8.58 times more volatile than SEI Investments. It trades about 0.02 of its total potential returns per unit of risk. SEI Investments is currently generating about 0.31 per unit of volatility. If you would invest  6,679  in SEI Investments on September 10, 2024 and sell it today you would earn a total of  1,730  from holding SEI Investments or generate 25.9% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy98.46%
ValuesDaily Returns

Peloton Minerals  vs.  SEI Investments

 Performance 
       Timeline  
Peloton Minerals 

Risk-Adjusted Performance

1 of 100

 
Weak
 
Strong
Weak
Compared to the overall equity markets, risk-adjusted returns on investments in Peloton Minerals are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile fundamental indicators, Peloton Minerals may actually be approaching a critical reversion point that can send shares even higher in January 2025.
SEI Investments 

Risk-Adjusted Performance

24 of 100

 
Weak
 
Strong
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.

Peloton Minerals and SEI Investments Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Peloton Minerals and SEI Investments

The main advantage of trading using opposite Peloton Minerals and SEI Investments positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Peloton Minerals 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 Peloton Minerals 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.

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