Correlation Between Ultimus Managers and Westwood Short

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

Diversification Opportunities for Ultimus Managers and Westwood Short

0.23

Correlation Coefficient

Ultimus Managers  Westwood Short

Modest diversification

The 3 months correlation between Ultimus and Westwood is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Ultimus Managers Trust and Westwood Short Duration in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Westwood Short Duration 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 Westwood Short. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Westwood Short Duration has no effect on the direction of Ultimus Managers i.e., Ultimus Managers and Westwood Short go up and down completely randomly.

Pair Corralation between Ultimus Managers and Westwood Short

Assuming the 90 days horizon Ultimus Managers Trust is expected to under-perform the Westwood Short. In addition to that, Ultimus Managers is 2.72 times more volatile than Westwood Short Duration. It trades about -0.06 of its total potential returns per unit of risk. Westwood Short Duration is currently generating about 0.02 per unit of volatility. If you would invest  987.00  in Westwood Short Duration on December 30, 2024 and sell it today you would earn a total of  3.00  from holding Westwood Short Duration or generate 0.3% 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.  Westwood Short Duration

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 fairly strong fundamental indicators, Ultimus Managers is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Westwood Short Duration

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Westwood Short Duration are ranked lower than 1 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Westwood Short is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Ultimus Managers and Westwood Short

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

The idea behind Ultimus Managers Trust and Westwood Short Duration 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.