Correlation Between Ultimus Managers and VanEck Energy

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

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

Diversification Opportunities for Ultimus Managers and VanEck Energy

0.99

Correlation Coefficient

Ultimus Managers  VanEck Energy

No risk reduction

The 3 months correlation between Ultimus and VanEck is 0.99. Overlapping area represents the amount of risk that can be diversified away by holding Ultimus Managers Trust and VanEck Energy Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VanEck Energy Income and Ultimus Managers 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 Ultimus Managers Trust are associated (or correlated) with VanEck Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VanEck Energy Income has no effect on the direction of Ultimus Managers i.e., Ultimus Managers and VanEck Energy go up and down completely randomly.

Pair Corralation between Ultimus Managers and VanEck Energy

Given the investment horizon of 90 days Ultimus Managers is expected to generate 1.55 times less return on investment than VanEck Energy. But when comparing it to its historical volatility, Ultimus Managers Trust is 1.32 times less risky than VanEck Energy. It trades about 0.18 of its potential returns per unit of risk. VanEck Energy Income is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest  8,272  in VanEck Energy Income on September 12, 2024 and sell it today you would earn a total of  1,249  from holding VanEck Energy Income or generate 15.1% return on investment over 90 days.

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

Ultimus Managers Trust  vs.  VanEck Energy Income

Ultimus Managers Trust

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Ultimus Managers Trust are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Ultimus Managers may actually be approaching a critical reversion point that can send shares even higher in January 2025.

VanEck Energy Income

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in VanEck Energy Income are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak basic indicators, VanEck Energy exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Ultimus Managers and VanEck Energy

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

The idea behind Ultimus Managers Trust and VanEck Energy Income 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.