Correlation Between SEI Investments and National Vision

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

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

Diversification Opportunities for SEI Investments and National Vision

0.72

Correlation Coefficient

SEI Investments  National Vision

Poor diversification

The 3 months correlation between SEI and National is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding SEI Investments and National Vision Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on National Vision Holdings and SEI Investments 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 Investments are associated (or correlated) with National Vision. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of National Vision Holdings has no effect on the direction of SEI Investments i.e., SEI Investments and National Vision go up and down completely randomly.

Pair Corralation between SEI Investments and National Vision

Given the investment horizon of 90 days SEI Investments is expected to generate 0.54 times more return on investment than National Vision. However, SEI Investments is 1.84 times less risky than National Vision. It trades about 0.22 of its potential returns per unit of risk. National Vision Holdings is currently generating about -0.01 per unit of risk. If you would invest  6,919  in SEI Investments on September 28, 2024 and sell it today you would earn a total of  1,395  from holding SEI Investments or generate 20.16% return on investment over 90 days.

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

SEI Investments  vs.  National Vision Holdings

SEI Investments

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in SEI Investments are ranked lower than 17 (%) 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.

National Vision Holdings

Risk-Adjusted Performance

0 of 100

Weak

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

Pair Trading with SEI Investments and National Vision

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

The idea behind SEI Investments and National Vision Holdings 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.