Correlation Between Ultimus Managers and American Beacon

Can any of the company-specific risk be diversified away by investing in both Ultimus Managers and American Beacon 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 American Beacon 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 American Beacon Select, you can compare the effects of market volatilities on Ultimus Managers and American Beacon 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 American Beacon. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ultimus Managers and American Beacon.

Diversification Opportunities for Ultimus Managers and American Beacon

0.68

Correlation Coefficient

Ultimus Managers  American Beacon

Poor diversification

The 3 months correlation between Ultimus and American is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Ultimus Managers Trust and American Beacon Select in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Beacon Select 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 American Beacon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Beacon Select has no effect on the direction of Ultimus Managers i.e., Ultimus Managers and American Beacon go up and down completely randomly.

Pair Corralation between Ultimus Managers and American Beacon

Given the investment horizon of 90 days Ultimus Managers Trust is expected to generate 0.64 times more return on investment than American Beacon. However, Ultimus Managers Trust is 1.57 times less risky than American Beacon. It trades about 0.06 of its potential returns per unit of risk. American Beacon Select is currently generating about 0.02 per unit of risk. If you would invest  2,678  in Ultimus Managers Trust on December 30, 2024 and sell it today you would earn a total of  101.00  from holding Ultimus Managers Trust or generate 3.77% return on investment over 90 days.

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

Ultimus Managers Trust  vs.  American Beacon Select

Ultimus Managers Trust

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Ultimus Managers Trust are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Ultimus Managers is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

American Beacon Select

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in American Beacon Select are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable basic indicators, American Beacon is not utilizing all of its potentials. The newest stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Ultimus Managers and American Beacon

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

The idea behind Ultimus Managers Trust and American Beacon Select 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.