Correlation Between S P and Union Auction

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

By analyzing existing cross correlation between S P V and Union Auction Public, you can compare the effects of market volatilities on S P and Union Auction 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 S P with a short position of Union Auction. Check out your portfolio center. Please also check ongoing floating volatility patterns of S P and Union Auction.

Diversification Opportunities for S P and Union Auction

0.94

Correlation Coefficient

S P  Union Auction

Almost no diversification

The 3 months correlation between SPVI and Union is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding S P V and Union Auction Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Union Auction Public and S P 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 S P V are associated (or correlated) with Union Auction. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Union Auction Public has no effect on the direction of S P i.e., S P and Union Auction go up and down completely randomly.

Pair Corralation between S P and Union Auction

Assuming the 90 days trading horizon S P V is expected to under-perform the Union Auction. In addition to that, S P is 2.36 times more volatile than Union Auction Public. It trades about -0.24 of its total potential returns per unit of risk. Union Auction Public is currently generating about -0.25 per unit of volatility. If you would invest  970.00  in Union Auction Public on September 15, 2024 and sell it today you would lose (135.00) from holding Union Auction Public or give up 13.92% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	100.0%
Values	Daily Returns

S P V  vs.  Union Auction Public

S P V

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days S P V has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's forward-looking signals remain quite persistent which may send shares a bit higher in January 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Union Auction Public

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Union Auction Public has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's forward-looking signals remain quite persistent which may send shares a bit higher in January 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with S P and Union Auction

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

The idea behind S P V and Union Auction Public 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.