Correlation Between Lument Finance and MFA Financial
Can any of the company-specific risk be diversified away by investing in both Lument Finance and MFA Financial 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 MFA Financial 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 MFA Financial, you can compare the effects of market volatilities on Lument Finance and MFA Financial 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 MFA Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lument Finance and MFA Financial.
Diversification Opportunities for Lument Finance and MFA Financial
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Lument and MFA is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Lument Finance Trust and MFA Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MFA Financial 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 MFA Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MFA Financial has no effect on the direction of Lument Finance i.e., Lument Finance and MFA Financial go up and down completely randomly.
Pair Corralation between Lument Finance and MFA Financial
Assuming the 90 days trading horizon Lument Finance Trust is expected to generate 1.95 times more return on investment than MFA Financial. However, Lument Finance is 1.95 times more volatile than MFA Financial. It trades about 0.11 of its potential returns per unit of risk. MFA Financial is currently generating about 0.07 per unit of risk. If you would invest 1,933 in Lument Finance Trust on August 30, 2024 and sell it today you would earn a total of 332.00 from holding Lument Finance Trust or generate 17.18% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.21% |
| Values | Daily Returns |
Lument Finance Trust vs. MFA Financial
Performance |
| Timeline |
| Lument Finance Trust |
| MFA Financial |
Lument Finance and MFA Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lument Finance and MFA Financial
The main advantage of trading using opposite Lument Finance and MFA Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lument Finance position performs unexpectedly, MFA Financial 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 MFA Financial will offset losses from the drop in MFA Financial's long position.| Lument Finance vs. ACRES Commercial Realty | Lument Finance vs. ACRES Commercial Realty | Lument Finance vs. KKR Real Estate | Lument Finance vs. NexPoint Real Estate |
| MFA Financial vs. AG Mortgage Investment | MFA Financial vs. AG Mortgage Investment | MFA Financial vs. Invesco Mortgage Capital | MFA Financial vs. Invesco Mortgage Capital |
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
Other Complementary Tools
| Fundamentals Comparison Compare fundamentals across multiple equities to find investing opportunities | |
| Sync Your Broker Sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors. | |
| Stocks Directory Find actively traded stocks across global markets | |
| Competition Analyzer Analyze and compare many basic indicators for a group of related or unrelated entities | |
| Portfolio File Import Quickly import all of your third-party portfolios from your local drive in csv format |