Correlation Between GEX and SEI Investments

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

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

Diversification Opportunities for GEX and SEI Investments

0.91

Correlation Coefficient

GEX  SEI Investments

Almost no diversification

The 3 months correlation between GEX and SEI is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding GEX and SEI Investments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SEI Investments and GEX 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 GEX 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 GEX i.e., GEX and SEI Investments go up and down completely randomly.

Pair Corralation between GEX and SEI Investments

Assuming the 90 days trading horizon GEX is expected to generate 3.13 times less return on investment than SEI Investments. But when comparing it to its historical volatility, GEX is 1.26 times less risky than SEI Investments. It trades about 0.05 of its potential returns per unit of risk. SEI Investments is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  7,948  in SEI Investments on May 5, 2025 and sell it today you would earn a total of  697.00  from holding SEI Investments or generate 8.77% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	95.45%
Values	Daily Returns

GEX  vs.  SEI Investments

Pair Trading with GEX and SEI Investments

The main advantage of trading using opposite GEX and SEI Investments positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GEX 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 GEX 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.