Correlation Between Ladder Capital and Starwood Property
Can any of the company-specific risk be diversified away by investing in both Ladder Capital and Starwood Property 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 Ladder Capital and Starwood Property into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ladder Capital Corp and Starwood Property Trust, you can compare the effects of market volatilities on Ladder Capital and Starwood Property 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 Ladder Capital with a short position of Starwood Property. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ladder Capital and Starwood Property.
Diversification Opportunities for Ladder Capital and Starwood Property
0.05 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Ladder and Starwood is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Ladder Capital Corp and Starwood Property Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Starwood Property Trust and Ladder Capital 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 Ladder Capital Corp are associated (or correlated) with Starwood Property. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Starwood Property Trust has no effect on the direction of Ladder Capital i.e., Ladder Capital and Starwood Property go up and down completely randomly.
Pair Corralation between Ladder Capital and Starwood Property
Given the investment horizon of 90 days Ladder Capital is expected to generate 1.08 times less return on investment than Starwood Property. In addition to that, Ladder Capital is 1.01 times more volatile than Starwood Property Trust. It trades about 0.08 of its total potential returns per unit of risk. Starwood Property Trust is currently generating about 0.08 per unit of volatility. If you would invest 1,806 in Starwood Property Trust on August 28, 2024 and sell it today you would earn a total of 218.00 from holding Starwood Property Trust or generate 12.07% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ladder Capital Corp vs. Starwood Property Trust
Performance |
| Timeline |
| Ladder Capital Corp |
| Starwood Property Trust |
Ladder Capital and Starwood Property Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ladder Capital and Starwood Property
The main advantage of trading using opposite Ladder Capital and Starwood Property positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ladder Capital position performs unexpectedly, Starwood Property 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 Starwood Property will offset losses from the drop in Starwood Property's long position.| Ladder Capital vs. KKR Real Estate | Ladder Capital vs. Ares Commercial Real | Ladder Capital vs. Ellington Residential Mortgage | Ladder Capital vs. Claros Mortgage Trust |
| Starwood Property vs. Blackstone Mortgage Trust | Starwood Property vs. Arbor Realty Trust | Starwood Property vs. Apollo Commercial Real | Starwood Property vs. Omega Healthcare Investors |
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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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