Correlation Between Lument Finance and Chicago Atlantic
Can any of the company-specific risk be diversified away by investing in both Lument Finance and Chicago Atlantic 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 Chicago Atlantic 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 Chicago Atlantic Real, you can compare the effects of market volatilities on Lument Finance and Chicago Atlantic 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 Chicago Atlantic. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lument Finance and Chicago Atlantic.
Diversification Opportunities for Lument Finance and Chicago Atlantic
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Lument and Chicago is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Lument Finance Trust and Chicago Atlantic Real in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chicago Atlantic Real 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 Chicago Atlantic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chicago Atlantic Real has no effect on the direction of Lument Finance i.e., Lument Finance and Chicago Atlantic go up and down completely randomly.
Pair Corralation between Lument Finance and Chicago Atlantic
Considering the 90-day investment horizon Lument Finance Trust is expected to generate 1.44 times more return on investment than Chicago Atlantic. However, Lument Finance is 1.44 times more volatile than Chicago Atlantic Real. It trades about 0.21 of its potential returns per unit of risk. Chicago Atlantic Real is currently generating about 0.12 per unit of risk. If you would invest 258.00 in Lument Finance Trust on November 18, 2024 and sell it today you would earn a total of 14.00 from holding Lument Finance Trust or generate 5.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lument Finance Trust vs. Chicago Atlantic Real
Performance |
| Timeline |
| Lument Finance Trust |
| Chicago Atlantic Real |
Lument Finance and Chicago Atlantic Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lument Finance and Chicago Atlantic
The main advantage of trading using opposite Lument Finance and Chicago Atlantic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lument Finance position performs unexpectedly, Chicago Atlantic 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 Chicago Atlantic will offset losses from the drop in Chicago Atlantic'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 |
| Chicago Atlantic vs. KKR Real Estate | Chicago Atlantic vs. Ellington Residential Mortgage | Chicago Atlantic vs. Claros Mortgage Trust | Chicago Atlantic vs. Ares Commercial Real |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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