Correlation Between Ultimus Managers and Invesco DWA

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

Diversification Opportunities for Ultimus Managers and Invesco DWA

0.58

Correlation Coefficient

Ultimus Managers  Invesco DWA

Very weak diversification

The 3 months correlation between Ultimus and Invesco is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Ultimus Managers Trust and Invesco DWA Basic in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Invesco DWA Basic 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 Invesco DWA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Invesco DWA Basic has no effect on the direction of Ultimus Managers i.e., Ultimus Managers and Invesco DWA go up and down completely randomly.

Pair Corralation between Ultimus Managers and Invesco DWA

Given the investment horizon of 90 days Ultimus Managers Trust is expected to generate 0.97 times more return on investment than Invesco DWA. However, Ultimus Managers Trust is 1.03 times less risky than Invesco DWA. It trades about 0.11 of its potential returns per unit of risk. Invesco DWA Basic is currently generating about 0.01 per unit of risk. If you would invest  2,608  in Ultimus Managers Trust on December 20, 2024 and sell it today you would earn a total of  191.00  from holding Ultimus Managers Trust or generate 7.32% return on investment over 90 days.

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

Ultimus Managers Trust  vs.  Invesco DWA Basic

Ultimus Managers Trust

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Ultimus Managers Trust are ranked lower than 8 (%) 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 April 2025.

Invesco DWA Basic

Risk-Adjusted Performance

Very Weak

Over the last 90 days Invesco DWA Basic has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Invesco DWA is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Ultimus Managers and Invesco DWA

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

The idea behind Ultimus Managers Trust and Invesco DWA Basic 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.