Correlation Between Lument Finance and Ready Capital
Can any of the company-specific risk be diversified away by investing in both Lument Finance and Ready Capital 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 Ready Capital 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 Ready Capital, you can compare the effects of market volatilities on Lument Finance and Ready Capital 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 Ready Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lument Finance and Ready Capital.
Diversification Opportunities for Lument Finance and Ready Capital
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Lument and Ready is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Lument Finance Trust and Ready Capital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ready Capital 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 Ready Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ready Capital has no effect on the direction of Lument Finance i.e., Lument Finance and Ready Capital go up and down completely randomly.
Pair Corralation between Lument Finance and Ready Capital
Assuming the 90 days trading horizon Lument Finance Trust is expected to generate 2.04 times more return on investment than Ready Capital. However, Lument Finance is 2.04 times more volatile than Ready Capital. It trades about 0.11 of its potential returns per unit of risk. Ready Capital is currently generating about 0.09 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. Ready Capital
Performance |
| Timeline |
| Lument Finance Trust |
| Ready Capital |
Lument Finance and Ready Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lument Finance and Ready Capital
The main advantage of trading using opposite Lument Finance and Ready Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lument Finance position performs unexpectedly, Ready Capital 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 Ready Capital will offset losses from the drop in Ready Capital'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 |
| Ready Capital vs. ACRES Commercial Realty | Ready Capital vs. Dynex Capital | Ready Capital vs. PennyMac Mortgage Investment | Ready Capital vs. AG 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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