Correlation Between Unity Software and SSgA SPDR

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

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

Diversification Opportunities for Unity Software and SSgA SPDR

0.25

Correlation Coefficient

Unity Software  SSgA SPDR

Modest diversification

The 3 months correlation between Unity and SSgA is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Unity Software and SSgA SPDR ETFs in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SSgA SPDR ETFs and Unity Software 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 Unity Software are associated (or correlated) with SSgA SPDR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SSgA SPDR ETFs has no effect on the direction of Unity Software i.e., Unity Software and SSgA SPDR go up and down completely randomly.

Pair Corralation between Unity Software and SSgA SPDR

Taking into account the 90-day investment horizon Unity Software is expected to generate 18.08 times more return on investment than SSgA SPDR. However, Unity Software is 18.08 times more volatile than SSgA SPDR ETFs. It trades about 0.05 of its potential returns per unit of risk. SSgA SPDR ETFs is currently generating about 0.08 per unit of risk. If you would invest  2,425  in Unity Software on December 1, 2024 and sell it today you would earn a total of  192.00  from holding Unity Software or generate 7.92% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	96.77%
Values	Daily Returns

Unity Software  vs.  SSgA SPDR ETFs

Unity Software

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Unity Software are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unfluctuating basic indicators, Unity Software unveiled solid returns over the last few months and may actually be approaching a breakup point.

SSgA SPDR ETFs

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in SSgA SPDR ETFs are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, SSgA SPDR is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Unity Software and SSgA SPDR

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

The idea behind Unity Software and SSgA SPDR ETFs 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.

Check out your portfolio center.

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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.