Correlation Between Unity Software and Raytheon Technologies

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

By analyzing existing cross correlation between Unity Software and Raytheon Technologies, you can compare the effects of market volatilities on Unity Software and Raytheon Technologies 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 Raytheon Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Unity Software and Raytheon Technologies.

Diversification Opportunities for Unity Software and Raytheon Technologies

0.72

Correlation Coefficient

Unity Software  Raytheon Technologies

Poor diversification

The 3 months correlation between Unity and Raytheon is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Unity Software and Raytheon Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Raytheon Technologies 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 Raytheon Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Raytheon Technologies has no effect on the direction of Unity Software i.e., Unity Software and Raytheon Technologies go up and down completely randomly.

Pair Corralation between Unity Software and Raytheon Technologies

Assuming the 90 days trading horizon Unity Software is expected to generate 3.11 times more return on investment than Raytheon Technologies. However, Unity Software is 3.11 times more volatile than Raytheon Technologies. It trades about 0.19 of its potential returns per unit of risk. Raytheon Technologies is currently generating about 0.22 per unit of risk. If you would invest  595.00  in Unity Software on April 23, 2025 and sell it today you would earn a total of  402.00  from holding Unity Software or generate 67.56% return on investment over 90 days.

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

Unity Software  vs.  Raytheon Technologies

Unity Software

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Unity Software are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Unity Software sustained solid returns over the last few months and may actually be approaching a breakup point.

Raytheon Technologies

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Raytheon Technologies are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Raytheon Technologies sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Unity Software and Raytheon Technologies

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

The idea behind Unity Software and Raytheon Technologies 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.