Correlation Between Acres Commercial and Lument Finance
Can any of the company-specific risk be diversified away by investing in both Acres Commercial and Lument Finance 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 Acres Commercial and Lument Finance into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Acres Commercial Realty and Lument Finance Trust, you can compare the effects of market volatilities on Acres Commercial and Lument Finance 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 Acres Commercial with a short position of Lument Finance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Acres Commercial and Lument Finance.
Diversification Opportunities for Acres Commercial and Lument Finance
0.48 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Acres and Lument is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Acres Commercial Realty and Lument Finance Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lument Finance Trust and Acres Commercial 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 Acres Commercial Realty are associated (or correlated) with Lument Finance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lument Finance Trust has no effect on the direction of Acres Commercial i.e., Acres Commercial and Lument Finance go up and down completely randomly.
Pair Corralation between Acres Commercial and Lument Finance
Considering the 90-day investment horizon Acres Commercial is expected to generate 2.63 times less return on investment than Lument Finance. In addition to that, Acres Commercial is 1.04 times more volatile than Lument Finance Trust. It trades about 0.03 of its total potential returns per unit of risk. Lument Finance Trust is currently generating about 0.09 per unit of volatility. If you would invest 244.00 in Lument Finance Trust on November 2, 2024 and sell it today you would earn a total of 16.00 from holding Lument Finance Trust or generate 6.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Acres Commercial Realty vs. Lument Finance Trust
Performance |
| Timeline |
| Acres Commercial Realty |
| Lument Finance Trust |
Acres Commercial and Lument Finance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Acres Commercial and Lument Finance
The main advantage of trading using opposite Acres Commercial and Lument Finance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Acres Commercial position performs unexpectedly, Lument Finance 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 Lument Finance will offset losses from the drop in Lument Finance's long position.| Acres Commercial vs. Lument Finance Trust | Acres Commercial vs. AG Mortgage Investment | Acres Commercial vs. Rithm Capital Corp | Acres Commercial vs. Cherry Hill Mortgage |
| Lument Finance vs. Acres Commercial Realty | Lument Finance vs. AG Mortgage Investment | Lument Finance vs. Rithm Capital Corp | Lument Finance vs. Ares Commercial Real |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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