Correlation Between Peloton Minerals and SEI Investments

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

Peloton Minerals  SEI Investments

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 8.24 times more return on investment than SEI Investments. However, Peloton Minerals is 8.24 times more volatile than SEI Investments. It trades about 0.03 of its potential returns per unit of risk. SEI Investments is currently generating about 0.08 per unit of risk. If you would invest  8.49  in Peloton Minerals on September 8, 2024 and sell it today you would lose (3.27) from holding Peloton Minerals or give up 38.52% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	99.8%
Values	Daily Returns

Peloton Minerals  vs.  SEI Investments

Peloton Minerals

Risk-Adjusted Performance

1 of 100

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

25 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in SEI Investments are ranked lower than 25 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady forward indicators, SEI Investments exhibited solid returns over the last few months and may actually be approaching a breakup point.

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.

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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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.