Correlation Between First Trust and Ultimus Managers
Can any of the company-specific risk be diversified away by investing in both First Trust 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 First Trust and Ultimus Managers into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between First Trust Exchange Traded and Ultimus Managers Trust, you can compare the effects of market volatilities on First Trust 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 First Trust with a short position of Ultimus Managers. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Trust and Ultimus Managers.
Diversification Opportunities for First Trust and Ultimus Managers
0.98 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between First and Ultimus is 0.98. Overlapping area represents the amount of risk that can be diversified away by holding First Trust Exchange Traded 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 First Trust 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 First Trust Exchange Traded 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 First Trust i.e., First Trust and Ultimus Managers go up and down completely randomly.
Pair Corralation between First Trust and Ultimus Managers
Given the investment horizon of 90 days First Trust is expected to generate 1.15 times less return on investment than Ultimus Managers. But when comparing it to its historical volatility, First Trust Exchange Traded is 1.29 times less risky than Ultimus Managers. It trades about 0.19 of its potential returns per unit of risk. Ultimus Managers Trust is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest 2,374 in Ultimus Managers Trust on September 3, 2024 and sell it today you would earn a total of 447.00 from holding Ultimus Managers Trust or generate 18.83% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
First Trust Exchange Traded vs. Ultimus Managers Trust
Performance |
| Timeline |
| First Trust Exchange |
| Ultimus Managers Trust |
First Trust and Ultimus Managers Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Trust and Ultimus Managers
The main advantage of trading using opposite First Trust and Ultimus Managers positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Trust 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.| First Trust vs. Ultimus Managers Trust | First Trust vs. American Beacon Select | First Trust vs. Direxion Daily Regional | First Trust vs. Direxion Daily SP |
| Ultimus Managers vs. Alerian Energy Infrastructure | Ultimus Managers vs. First Trust North | Ultimus Managers vs. UBS AG London |
Check out your portfolio center.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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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