Correlation Between Lument Finance and Angel Oak
Can any of the company-specific risk be diversified away by investing in both Lument Finance and Angel Oak 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 Lument Finance and Angel Oak into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lument Finance Trust and Angel Oak Mortgage, you can compare the effects of market volatilities on Lument Finance and Angel Oak 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 Lument Finance with a short position of Angel Oak. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lument Finance and Angel Oak.
Diversification Opportunities for Lument Finance and Angel Oak
-0.84 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Lument and Angel is -0.84. Overlapping area represents the amount of risk that can be diversified away by holding Lument Finance Trust and Angel Oak Mortgage in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Angel Oak Mortgage and Lument Finance 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 Lument Finance Trust are associated (or correlated) with Angel Oak. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Angel Oak Mortgage has no effect on the direction of Lument Finance i.e., Lument Finance and Angel Oak go up and down completely randomly.
Pair Corralation between Lument Finance and Angel Oak
Assuming the 90 days trading horizon Lument Finance is expected to generate 3.34 times less return on investment than Angel Oak. But when comparing it to its historical volatility, Lument Finance Trust is 1.85 times less risky than Angel Oak. It trades about 0.11 of its potential returns per unit of risk. Angel Oak Mortgage is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest 895.00 in Angel Oak Mortgage on August 28, 2024 and sell it today you would earn a total of 66.00 from holding Angel Oak Mortgage or generate 7.37% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lument Finance Trust vs. Angel Oak Mortgage
Performance |
| Timeline |
| Lument Finance Trust |
| Angel Oak Mortgage |
Lument Finance and Angel Oak Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lument Finance and Angel Oak
The main advantage of trading using opposite Lument Finance and Angel Oak positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lument Finance position performs unexpectedly, Angel Oak 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 Angel Oak will offset losses from the drop in Angel Oak's long position.The idea behind Lument Finance Trust and Angel Oak Mortgage 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.| Angel Oak vs. Granite Point Mortgage | Angel Oak vs. MFA Financial | Angel Oak vs. Two Harbors Investments | Angel Oak vs. PennyMac Mortgage Investment |
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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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