Correlation Between SEELE and DIA

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

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

Diversification Opportunities for SEELE and DIA

0.0

Correlation Coefficient

SEELE  DIA

Pay attention - limited upside

The 3 months correlation between SEELE and DIA is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding SEELE and DIA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DIA and SEELE 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 SEELE are associated (or correlated) with DIA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DIA has no effect on the direction of SEELE i.e., SEELE and DIA go up and down completely randomly.

Pair Corralation between SEELE and DIA

If you would invest  87.00  in DIA on September 2, 2024 and sell it today you would earn a total of  2.00  from holding DIA or generate 2.3% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

SEELE  vs.  DIA

SEELE

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SEELE has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound fundamental indicators, SEELE is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

DIA

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in DIA are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, DIA exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with SEELE and DIA

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

The idea behind SEELE and DIA 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.