Correlation Between Lument Finance and Inpoint Commercial
Can any of the company-specific risk be diversified away by investing in both Lument Finance and Inpoint Commercial 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 Inpoint Commercial 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 Inpoint Commercial Real, you can compare the effects of market volatilities on Lument Finance and Inpoint Commercial 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 Inpoint Commercial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lument Finance and Inpoint Commercial.
Diversification Opportunities for Lument Finance and Inpoint Commercial
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Lument and Inpoint is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Lument Finance Trust and Inpoint Commercial Real in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Inpoint Commercial Real 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 Inpoint Commercial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Inpoint Commercial Real has no effect on the direction of Lument Finance i.e., Lument Finance and Inpoint Commercial go up and down completely randomly.
Pair Corralation between Lument Finance and Inpoint Commercial
Assuming the 90 days trading horizon Lument Finance Trust is expected to generate 1.8 times more return on investment than Inpoint Commercial. However, Lument Finance is 1.8 times more volatile than Inpoint Commercial Real. It trades about 0.02 of its potential returns per unit of risk. Inpoint Commercial Real is currently generating about 0.04 per unit of risk. If you would invest 2,016 in Lument Finance Trust on September 1, 2024 and sell it today you would earn a total of 282.00 from holding Lument Finance Trust or generate 13.99% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 96.92% |
| Values | Daily Returns |
Lument Finance Trust vs. Inpoint Commercial Real
Performance |
| Timeline |
| Lument Finance Trust |
| Inpoint Commercial Real |
Lument Finance and Inpoint Commercial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lument Finance and Inpoint Commercial
The main advantage of trading using opposite Lument Finance and Inpoint Commercial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lument Finance position performs unexpectedly, Inpoint Commercial 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 Inpoint Commercial will offset losses from the drop in Inpoint Commercial's long position.The idea behind Lument Finance Trust and Inpoint Commercial Real 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.| Inpoint Commercial vs. Invesco Mortgage Capital | Inpoint Commercial vs. ARMOUR Residential REIT | Inpoint Commercial vs. Chimera Investment | Inpoint Commercial vs. Cherry Hill Mortgage |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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