Correlation Between SPDR SP and Unified Series

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

By analyzing existing cross correlation between SPDR SP 500 and Unified Series Trust, you can compare the effects of market volatilities on SPDR SP and Unified Series 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 SPDR SP with a short position of Unified Series. Check out your portfolio center. Please also check ongoing floating volatility patterns of SPDR SP and Unified Series.

Diversification Opportunities for SPDR SP and Unified Series

0.93

Correlation Coefficient

SPDR SP  Unified Series

Almost no diversification

The 3 months correlation between SPDR and Unified is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding SPDR SP 500 and Unified Series Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Unified Series Trust and SPDR SP 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 SPDR SP 500 are associated (or correlated) with Unified Series. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Unified Series Trust has no effect on the direction of SPDR SP i.e., SPDR SP and Unified Series go up and down completely randomly.

Pair Corralation between SPDR SP and Unified Series

Considering the 90-day investment horizon SPDR SP 500 is expected to under-perform the Unified Series. But the etf apears to be less risky and, when comparing its historical volatility, SPDR SP 500 is 1.02 times less risky than Unified Series. The etf trades about -0.05 of its potential returns per unit of risk. The Unified Series Trust is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest  2,986  in Unified Series Trust on December 28, 2024 and sell it today you would lose (70.00) from holding Unified Series Trust or give up 2.34% of portfolio value over 90 days.

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

SPDR SP 500  vs.  Unified Series Trust

SPDR SP 500

Risk-Adjusted Performance

Very Weak

Over the last 90 days SPDR SP 500 has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, SPDR SP is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Unified Series Trust

Risk-Adjusted Performance

Very Weak

Over the last 90 days Unified Series Trust has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound essential indicators, Unified Series is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with SPDR SP and Unified Series

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

The idea behind SPDR SP 500 and Unified Series Trust 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.