Correlation Between SEI Investments and Molson Coors

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

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

Diversification Opportunities for SEI Investments and Molson Coors

0.84

Correlation Coefficient

SEI Investments  Molson Coors

Very poor diversification

The 3 months correlation between SEI and Molson is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding SEI Investments and Molson Coors Brewing in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Molson Coors Brewing 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 Molson Coors. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Molson Coors Brewing has no effect on the direction of SEI Investments i.e., SEI Investments and Molson Coors go up and down completely randomly.

Pair Corralation between SEI Investments and Molson Coors

Given the investment horizon of 90 days SEI Investments is expected to generate 1.62 times more return on investment than Molson Coors. However, SEI Investments is 1.62 times more volatile than Molson Coors Brewing. It trades about 0.08 of its potential returns per unit of risk. Molson Coors Brewing is currently generating about -0.21 per unit of risk. If you would invest  8,244  in SEI Investments on September 27, 2024 and sell it today you would earn a total of  184.00  from holding SEI Investments or generate 2.23% return on investment over 90 days.

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

SEI Investments  vs.  Molson Coors Brewing

SEI Investments

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in SEI Investments are ranked lower than 18 (%) 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.

Molson Coors Brewing

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Molson Coors Brewing are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable basic indicators, Molson Coors is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with SEI Investments and Molson Coors

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

The idea behind SEI Investments and Molson Coors Brewing 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.