Correlation Between Lument Finance and Rithm Property
Can any of the company-specific risk be diversified away by investing in both Lument Finance and Rithm Property 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 Rithm Property 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 Rithm Property Trust, you can compare the effects of market volatilities on Lument Finance and Rithm Property 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 Rithm Property. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lument Finance and Rithm Property.
Diversification Opportunities for Lument Finance and Rithm Property
-0.7 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Lument and Rithm is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding Lument Finance Trust and Rithm Property Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rithm Property Trust 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 Rithm Property. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rithm Property Trust has no effect on the direction of Lument Finance i.e., Lument Finance and Rithm Property go up and down completely randomly.
Pair Corralation between Lument Finance and Rithm Property
Assuming the 90 days trading horizon Lument Finance Trust is expected to generate 1.01 times more return on investment than Rithm Property. However, Lument Finance is 1.01 times more volatile than Rithm Property Trust. It trades about 0.04 of its potential returns per unit of risk. Rithm Property Trust is currently generating about -0.05 per unit of risk. If you would invest 2,282 in Lument Finance Trust on September 12, 2024 and sell it today you would earn a total of 18.00 from holding Lument Finance Trust or generate 0.79% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lument Finance Trust vs. Rithm Property Trust
Performance |
| Timeline |
| Lument Finance Trust |
| Rithm Property Trust |
Lument Finance and Rithm Property Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lument Finance and Rithm Property
The main advantage of trading using opposite Lument Finance and Rithm Property positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lument Finance position performs unexpectedly, Rithm Property 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 Rithm Property will offset losses from the drop in Rithm Property's long position.| Lument Finance vs. ACRES Commercial Realty | Lument Finance vs. Dynex Capital | Lument Finance vs. PennyMac Mortgage Investment | Lument Finance vs. AG Mortgage Investment |
| Rithm Property vs. Urban Edge Properties | Rithm Property vs. Kite Realty Group | Rithm Property vs. Retail Opportunity Investments | Rithm Property vs. Inventrust Properties Corp |
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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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