Correlation Between Sei Instit and Simt Multi

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

By analyzing existing cross correlation between Sei Instit International and Simt Multi Asset Accumulation, you can compare the effects of market volatilities on Sei Instit and Simt Multi 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 Sei Instit with a short position of Simt Multi. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sei Instit and Simt Multi.

Diversification Opportunities for Sei Instit and Simt Multi

0.79

Correlation Coefficient

Sei Instit  Simt Multi

Poor diversification

The 3 months correlation between Sei and Simt is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Sei Instit International and Simt Multi Asset Accumulation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Simt Multi Asset and Sei Instit 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 Sei Instit International are associated (or correlated) with Simt Multi. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Simt Multi Asset has no effect on the direction of Sei Instit i.e., Sei Instit and Simt Multi go up and down completely randomly.

Pair Corralation between Sei Instit and Simt Multi

Assuming the 90 days horizon Sei Instit International is expected to generate 1.5 times more return on investment than Simt Multi. However, Sei Instit is 1.5 times more volatile than Simt Multi Asset Accumulation. It trades about -0.04 of its potential returns per unit of risk. Simt Multi Asset Accumulation is currently generating about -0.06 per unit of risk. If you would invest  1,297  in Sei Instit International on September 16, 2024 and sell it today you would lose (23.00) from holding Sei Instit International or give up 1.77% of portfolio value over 90 days.

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

Sei Instit International  vs.  Simt Multi Asset Accumulation

Sei Instit International

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sei Instit International has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong forward indicators, Sei Instit is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Simt Multi Asset

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Simt Multi Asset Accumulation has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Simt Multi is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Sei Instit and Simt Multi

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

The idea behind Sei Instit International and Simt Multi Asset Accumulation 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 Transaction History module to view history of all your transactions and understand their impact on performance.