Correlation Between SEI Investments and MCKESSON

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

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

Diversification Opportunities for SEI Investments and MCKESSON

-0.45

Correlation Coefficient

SEI Investments  MCKESSON

Very good diversification

The 3 months correlation between SEI and MCKESSON is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding SEI Investments and MCKESSON P NEW in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MCKESSON P NEW 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 MCKESSON. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MCKESSON P NEW has no effect on the direction of SEI Investments i.e., SEI Investments and MCKESSON go up and down completely randomly.

Pair Corralation between SEI Investments and MCKESSON

Given the investment horizon of 90 days SEI Investments is expected to generate 0.69 times more return on investment than MCKESSON. However, SEI Investments is 1.46 times less risky than MCKESSON. It trades about 0.34 of its potential returns per unit of risk. MCKESSON P NEW is currently generating about -0.03 per unit of risk. If you would invest  8,058  in SEI Investments on September 19, 2024 and sell it today you would earn a total of  454.00  from holding SEI Investments or generate 5.63% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	66.67%
Values	Daily Returns

SEI Investments  vs.  MCKESSON P NEW

SEI Investments

Risk-Adjusted Performance

22 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in SEI Investments are ranked lower than 22 (%) 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.

MCKESSON P NEW

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days MCKESSON P NEW has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, MCKESSON is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with SEI Investments and MCKESSON

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

The idea behind SEI Investments and MCKESSON P NEW 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.