Correlation Between Lument Finance and Acres Commercial
Can any of the company-specific risk be diversified away by investing in both Lument Finance and Acres 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 Acres 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 Acres Commercial Realty, you can compare the effects of market volatilities on Lument Finance and Acres 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 Acres Commercial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lument Finance and Acres Commercial.
Diversification Opportunities for Lument Finance and Acres Commercial
0.15 | Correlation Coefficient |
Average diversification
The 3 months correlation between Lument and Acres is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Lument Finance Trust and Acres Commercial Realty in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Acres Commercial Realty 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 Acres Commercial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Acres Commercial Realty has no effect on the direction of Lument Finance i.e., Lument Finance and Acres Commercial go up and down completely randomly.
Pair Corralation between Lument Finance and Acres Commercial
Considering the 90-day investment horizon Lument Finance is expected to generate 1.08 times less return on investment than Acres Commercial. But when comparing it to its historical volatility, Lument Finance Trust is 1.1 times less risky than Acres Commercial. It trades about 0.06 of its potential returns per unit of risk. Acres Commercial Realty is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 958.00 in Acres Commercial Realty on August 27, 2024 and sell it today you would earn a total of 717.00 from holding Acres Commercial Realty or generate 74.84% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lument Finance Trust vs. Acres Commercial Realty
Performance |
| Timeline |
| Lument Finance Trust |
| Acres Commercial Realty |
Lument Finance and Acres Commercial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lument Finance and Acres Commercial
The main advantage of trading using opposite Lument Finance and Acres Commercial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lument Finance position performs unexpectedly, Acres 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 Acres Commercial will offset losses from the drop in Acres Commercial's long position.| Lument Finance vs. Acres Commercial Realty | Lument Finance vs. AG Mortgage Investment | Lument Finance vs. Rithm Capital Corp | Lument Finance vs. Ares Commercial Real |
| Acres Commercial vs. Blackstone Mortgage Trust | Acres Commercial vs. Omega Healthcare Investors | Acres Commercial vs. Medical Properties Trust |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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