Correlation Between Abrdn Emerging and SEI Investments

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Can any of the company-specific risk be diversified away by investing in both Abrdn Emerging 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 Abrdn Emerging and SEI Investments into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Abrdn Emerging Markets and SEI Investments, you can compare the effects of market volatilities on Abrdn Emerging 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 Abrdn Emerging with a short position of SEI Investments. Check out your portfolio center. Please also check ongoing floating volatility patterns of Abrdn Emerging and SEI Investments.

Diversification Opportunities for Abrdn Emerging and SEI Investments

0.11
  Correlation Coefficient

Average diversification

The 3 months correlation between Abrdn and SEI is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding Abrdn Emerging Markets and SEI Investments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SEI Investments and Abrdn Emerging 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 Abrdn Emerging Markets 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 Abrdn Emerging i.e., Abrdn Emerging and SEI Investments go up and down completely randomly.

Pair Corralation between Abrdn Emerging and SEI Investments

Considering the 90-day investment horizon Abrdn Emerging Markets is expected to generate 0.43 times more return on investment than SEI Investments. However, Abrdn Emerging Markets is 2.31 times less risky than SEI Investments. It trades about 0.12 of its potential returns per unit of risk. SEI Investments is currently generating about -0.02 per unit of risk. If you would invest  524.00  in Abrdn Emerging Markets on April 22, 2024 and sell it today you would earn a total of  8.00  from holding Abrdn Emerging Markets or generate 1.53% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Abrdn Emerging Markets  vs.  SEI Investments

 Performance 
       Timeline  
Abrdn Emerging Markets 

Risk-Adjusted Performance

15 of 100

 
Weak
 
Strong
Good
Compared to the overall equity markets, risk-adjusted returns on investments in Abrdn Emerging Markets are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady technical and fundamental indicators, Abrdn Emerging may actually be approaching a critical reversion point that can send shares even higher in August 2024.
SEI Investments 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days SEI Investments has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound forward indicators, SEI Investments is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Abrdn Emerging and SEI Investments Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Abrdn Emerging and SEI Investments

The main advantage of trading using opposite Abrdn Emerging and SEI Investments positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Abrdn Emerging 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 Abrdn Emerging Markets 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.
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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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.

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