Correlation Between SEI Investments and Paylocity Holdng

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

Diversification Opportunities for SEI Investments and Paylocity Holdng

-0.26
  Correlation Coefficient

Very good diversification

The 13 months correlation between SEI and Paylocity is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding SEI Investments and Paylocity Holdng in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Paylocity Holdng 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 Paylocity Holdng. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Paylocity Holdng has no effect on the direction of SEI Investments i.e., SEI Investments and Paylocity Holdng go up and down completely randomly.

Pair Corralation between SEI Investments and Paylocity Holdng

Given the investment horizon of 90 days SEI Investments is expected to generate 0.47 times more return on investment than Paylocity Holdng. However, SEI Investments is 2.13 times less risky than Paylocity Holdng. It trades about -0.13 of its potential returns per unit of risk. Paylocity Holdng is currently generating about -0.63 per unit of risk. If you would invest  6,749  in SEI Investments on March 21, 2024 and sell it today you would lose (173.00) from holding SEI Investments or give up 2.56% of portfolio value over 90 days.
Time Period13 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy95.45%
ValuesDaily Returns

SEI Investments  vs.  Paylocity Holdng

 Performance 
       Timeline  
SEI Investments 

Risk-Adjusted Performance

4 of 100

 
Weak
 
Strong
Very Weak
Compared to the overall equity markets, risk-adjusted returns on investments in SEI Investments are ranked lower than 4 (%) 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.
Paylocity Holdng 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Paylocity Holdng has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Paylocity Holdng is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

SEI Investments and Paylocity Holdng Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with SEI Investments and Paylocity Holdng

The main advantage of trading using opposite SEI Investments and Paylocity Holdng positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SEI Investments position performs unexpectedly, Paylocity Holdng 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 Paylocity Holdng will offset losses from the drop in Paylocity Holdng's long position.
The idea behind SEI Investments and Paylocity Holdng 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..

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