Correlation Between Lument Finance and KKR Real
Can any of the company-specific risk be diversified away by investing in both Lument Finance and KKR Real 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 KKR Real 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 KKR Real Estate, you can compare the effects of market volatilities on Lument Finance and KKR Real 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 KKR Real. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lument Finance and KKR Real.
Diversification Opportunities for Lument Finance and KKR Real
0.13 | Correlation Coefficient |
Average diversification
The 3 months correlation between Lument and KKR is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding Lument Finance Trust and KKR Real Estate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KKR Real Estate 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 KKR Real. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KKR Real Estate has no effect on the direction of Lument Finance i.e., Lument Finance and KKR Real go up and down completely randomly.
Pair Corralation between Lument Finance and KKR Real
Assuming the 90 days trading horizon Lument Finance Trust is expected to generate 0.61 times more return on investment than KKR Real. However, Lument Finance Trust is 1.65 times less risky than KKR Real. It trades about 0.11 of its potential returns per unit of risk. KKR Real Estate is currently generating about 0.01 per unit of risk. If you would invest 1,636 in Lument Finance Trust on August 27, 2024 and sell it today you would earn a total of 609.00 from holding Lument Finance Trust or generate 37.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 98.39% |
| Values | Daily Returns |
Lument Finance Trust vs. KKR Real Estate
Performance |
| Timeline |
| Lument Finance Trust |
| KKR Real Estate |
Lument Finance and KKR Real Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lument Finance and KKR Real
The main advantage of trading using opposite Lument Finance and KKR Real positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lument Finance position performs unexpectedly, KKR Real 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 KKR Real will offset losses from the drop in KKR Real's long position.| Lument Finance vs. Rithm Capital Corp | Lument Finance vs. PennyMac Mortgage Investment | Lument Finance vs. AGNC Investment Corp |
| KKR Real vs. Ellington Financial | KKR Real vs. Dynex Capital | KKR Real vs. Ares Commercial Real | KKR Real 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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