Correlation Between SEI Investments and Morgan Stanley

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

By analyzing existing cross correlation between SEI Investments and Morgan Stanley, you can compare the effects of market volatilities on SEI Investments and Morgan Stanley 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 Morgan Stanley. Check out your portfolio center. Please also check ongoing floating volatility patterns of SEI Investments and Morgan Stanley.

Diversification Opportunities for SEI Investments and Morgan Stanley

0.9

Correlation Coefficient

SEI Investments  Morgan Stanley

Almost no diversification

The 3 months correlation between SEI and Morgan is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding SEI Investments and Morgan Stanley in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Morgan Stanley 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 Morgan Stanley. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Morgan Stanley has no effect on the direction of SEI Investments i.e., SEI Investments and Morgan Stanley go up and down completely randomly.

Pair Corralation between SEI Investments and Morgan Stanley

Given the investment horizon of 90 days SEI Investments is expected to generate 0.9 times more return on investment than Morgan Stanley. However, SEI Investments is 1.11 times less risky than Morgan Stanley. It trades about 0.12 of its potential returns per unit of risk. Morgan Stanley is currently generating about -0.18 per unit of risk. If you would invest  7,991  in SEI Investments on September 21, 2024 and sell it today you would earn a total of  284.00  from holding SEI Investments or generate 3.55% return on investment over 90 days.

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

SEI Investments  vs.  Morgan Stanley

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 abnormal forward indicators, SEI Investments exhibited solid returns over the last few months and may actually be approaching a breakup point.

Morgan Stanley

Risk-Adjusted Performance

12 of 100

OK

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

Pair Trading with SEI Investments and Morgan Stanley

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

The idea behind SEI Investments and Morgan Stanley 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.