Correlation Between Ultimus Managers and Themes Transatlantic

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

Diversification Opportunities for Ultimus Managers and Themes Transatlantic

0.2

Correlation Coefficient

Ultimus Managers  Themes Transatlantic

Modest diversification

The 3 months correlation between Ultimus and Themes is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Ultimus Managers Trust and Themes Transatlantic Defense in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Themes Transatlantic 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 Themes Transatlantic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Themes Transatlantic has no effect on the direction of Ultimus Managers i.e., Ultimus Managers and Themes Transatlantic go up and down completely randomly.

Pair Corralation between Ultimus Managers and Themes Transatlantic

Given the investment horizon of 90 days Ultimus Managers is expected to generate 2.43 times less return on investment than Themes Transatlantic. But when comparing it to its historical volatility, Ultimus Managers Trust is 1.14 times less risky than Themes Transatlantic. It trades about 0.08 of its potential returns per unit of risk. Themes Transatlantic Defense is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest  2,556  in Themes Transatlantic Defense on December 22, 2024 and sell it today you would earn a total of  351.00  from holding Themes Transatlantic Defense or generate 13.73% return on investment over 90 days.

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

Ultimus Managers Trust  vs.  Themes Transatlantic Defense

Ultimus Managers Trust

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Ultimus Managers Trust are ranked lower than 6 (%) 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 current stock price uproar, may contribute to short-horizon losses for the private investors.

Themes Transatlantic

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Themes Transatlantic Defense are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of very conflicting basic indicators, Themes Transatlantic displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Ultimus Managers and Themes Transatlantic

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

The idea behind Ultimus Managers Trust and Themes Transatlantic Defense 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.