Correlation Between Maxus Realty and Lument Finance
Can any of the company-specific risk be diversified away by investing in both Maxus Realty and Lument Finance 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 Maxus Realty and Lument Finance into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Maxus Realty Trust and Lument Finance Trust, you can compare the effects of market volatilities on Maxus Realty and Lument Finance 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 Maxus Realty with a short position of Lument Finance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Maxus Realty and Lument Finance.
Diversification Opportunities for Maxus Realty and Lument Finance
-0.69 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Maxus and Lument is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding Maxus Realty Trust and Lument Finance Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lument Finance Trust and Maxus Realty 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 Maxus Realty Trust are associated (or correlated) with Lument Finance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lument Finance Trust has no effect on the direction of Maxus Realty i.e., Maxus Realty and Lument Finance go up and down completely randomly.
Pair Corralation between Maxus Realty and Lument Finance
Given the investment horizon of 90 days Maxus Realty is expected to generate 1.42 times less return on investment than Lument Finance. In addition to that, Maxus Realty is 1.43 times more volatile than Lument Finance Trust. It trades about 0.02 of its total potential returns per unit of risk. Lument Finance Trust is currently generating about 0.04 per unit of volatility. If you would invest 1,609 in Lument Finance Trust on August 24, 2024 and sell it today you would earn a total of 636.00 from holding Lument Finance Trust or generate 39.53% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 32.99% |
| Values | Daily Returns |
Maxus Realty Trust vs. Lument Finance Trust
Performance |
| Timeline |
| Maxus Realty Trust |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Lument Finance Trust |
Maxus Realty and Lument Finance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Maxus Realty and Lument Finance
The main advantage of trading using opposite Maxus Realty and Lument Finance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Maxus Realty position performs unexpectedly, Lument Finance 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 Lument Finance will offset losses from the drop in Lument Finance's long position.The idea behind Maxus Realty Trust and Lument Finance Trust pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Lument Finance vs. Rithm Capital Corp | Lument Finance vs. Rithm Capital Corp | Lument Finance vs. Rithm Capital Corp | Lument Finance vs. PennyMac 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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