Correlation Between Cornerstone Building and SEI Investments

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

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

Diversification Opportunities for Cornerstone Building and SEI Investments

0.04

Correlation Coefficient

Cornerstone Building  SEI Investments

Significant diversification

The 3 months correlation between Cornerstone and SEI is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Cornerstone Building Brands and SEI Investments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SEI Investments and Cornerstone Building 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 Cornerstone Building Brands are associated (or correlated) with SEI Investments. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SEI Investments has no effect on the direction of Cornerstone Building i.e., Cornerstone Building and SEI Investments go up and down completely randomly.

Pair Corralation between Cornerstone Building and SEI Investments

If you would invest  6,028  in SEI Investments on January 31, 2024 and sell it today you would earn a total of  625.00  from holding SEI Investments or generate 10.37% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	0.3%
Values	Daily Returns

Cornerstone Building Brands  vs.  SEI Investments

Cornerstone Building

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Cornerstone Building Brands has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Cornerstone Building is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

SEI Investments

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in SEI Investments are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound forward indicators, SEI Investments is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Cornerstone Building and SEI Investments

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

The idea behind Cornerstone Building Brands and SEI Investments 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.

Check out your portfolio center.

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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.