Correlation Between Ultimus Managers and Westwood Largecap

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

Diversification Opportunities for Ultimus Managers and Westwood Largecap

0.9

Correlation Coefficient

Ultimus Managers  Westwood Largecap

Almost no diversification

The 3 months correlation between Ultimus and Westwood is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Ultimus Managers Trust and Westwood Largecap Value in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Westwood Largecap Value 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 Largecap. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Westwood Largecap Value has no effect on the direction of Ultimus Managers i.e., Ultimus Managers and Westwood Largecap go up and down completely randomly.

Pair Corralation between Ultimus Managers and Westwood Largecap

Assuming the 90 days horizon Ultimus Managers Trust is expected to under-perform the Westwood Largecap. But the mutual fund apears to be less risky and, when comparing its historical volatility, Ultimus Managers Trust is 1.06 times less risky than Westwood Largecap. The mutual fund trades about -0.19 of its potential returns per unit of risk. The Westwood Largecap Value is currently generating about -0.12 of returns per unit of risk over similar time horizon. If you would invest  1,524  in Westwood Largecap Value on December 1, 2024 and sell it today you would lose (113.00) from holding Westwood Largecap Value or give up 7.41% of portfolio value over 90 days.

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

Ultimus Managers Trust  vs.  Westwood Largecap Value

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.

Westwood Largecap Value

Risk-Adjusted Performance

Very Weak

Over the last 90 days Westwood Largecap Value has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's basic 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 Ultimus Managers and Westwood Largecap

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

The idea behind Ultimus Managers Trust and Westwood Largecap Value 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.