Correlation Between Columbia Small and Ultimus Managers

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

By analyzing existing cross correlation between Columbia Small Cap and Ultimus Managers Trust, you can compare the effects of market volatilities on Columbia Small and Ultimus Managers 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 Columbia Small with a short position of Ultimus Managers. Check out your portfolio center. Please also check ongoing floating volatility patterns of Columbia Small and Ultimus Managers.

Diversification Opportunities for Columbia Small and Ultimus Managers

0.57

Correlation Coefficient

Columbia Small  Ultimus Managers

Very weak diversification

The 3 months correlation between Columbia and Ultimus is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Columbia Small Cap and Ultimus Managers Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ultimus Managers Trust and Columbia Small 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 Columbia Small Cap are associated (or correlated) with Ultimus Managers. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ultimus Managers Trust has no effect on the direction of Columbia Small i.e., Columbia Small and Ultimus Managers go up and down completely randomly.

Pair Corralation between Columbia Small and Ultimus Managers

Assuming the 90 days horizon Columbia Small Cap is expected to generate 1.66 times more return on investment than Ultimus Managers. However, Columbia Small is 1.66 times more volatile than Ultimus Managers Trust. It trades about 0.12 of its potential returns per unit of risk. Ultimus Managers Trust is currently generating about -0.05 per unit of risk. If you would invest  5,706  in Columbia Small Cap on September 12, 2024 and sell it today you would earn a total of  86.00  from holding Columbia Small Cap or generate 1.51% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	54.55%
Values	Daily Returns

Columbia Small Cap  vs.  Ultimus Managers Trust

Columbia Small Cap

Risk-Adjusted Performance

0 of 100

Solid

Over the last 90 days Columbia Small Cap has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly weak basic indicators, Columbia Small showed solid returns over the last few months and may actually be approaching a breakup point.

Ultimus Managers Trust

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Ultimus Managers Trust are ranked lower than 10 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong fundamental indicators, Ultimus Managers is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Columbia Small and Ultimus Managers

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

The idea behind Columbia Small Cap and Ultimus Managers 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.

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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.