Correlation Between Westwood High and Ultimus Managers

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

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

Diversification Opportunities for Westwood High and Ultimus Managers

-0.41

Correlation Coefficient

Westwood High  Ultimus Managers

Very good diversification

The 3 months correlation between Westwood and Ultimus is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding Westwood High Income 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 Westwood High 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 Westwood High Income 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 Westwood High i.e., Westwood High and Ultimus Managers go up and down completely randomly.

Pair Corralation between Westwood High and Ultimus Managers

Assuming the 90 days horizon Westwood High Income is expected to generate 0.33 times more return on investment than Ultimus Managers. However, Westwood High Income is 3.02 times less risky than Ultimus Managers. It trades about -0.02 of its potential returns per unit of risk. Ultimus Managers Trust is currently generating about -0.19 per unit of risk. If you would invest  1,017  in Westwood High Income on December 1, 2024 and sell it today you would lose (4.00) from holding Westwood High Income or give up 0.39% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	80.0%
Values	Daily Returns

Westwood High Income  vs.  Ultimus Managers Trust

Westwood High Income

Risk-Adjusted Performance

Very Weak

Over the last 90 days Westwood High Income has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong fundamental indicators, Westwood High is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Ultimus Managers Trust

Risk-Adjusted Performance

Very Weak

Over the last 90 days Ultimus Managers Trust has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's fundamental indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Pair Trading with Westwood High and Ultimus Managers

The main advantage of trading using opposite Westwood High and Ultimus Managers positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Westwood High 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 Westwood High Income 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.

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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 Commodity Directory module to find actively traded commodities issued by global exchanges.