Correlation Between Broadmark Realty and Lument Finance

Can any of the company-specific risk be diversified away by investing in both Broadmark 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 Broadmark 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 Broadmark Realty Capital and Lument Finance Trust, you can compare the effects of market volatilities on Broadmark 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 Broadmark Realty with a short position of Lument Finance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Broadmark Realty and Lument Finance.

Diversification Opportunities for Broadmark Realty and Lument Finance

0.0

Correlation Coefficient

Broadmark Realty  Lument Finance

Pay attention - limited upside

The 3 months correlation between Broadmark and Lument is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Broadmark Realty Capital 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 Broadmark 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 Broadmark Realty Capital 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 Broadmark Realty i.e., Broadmark Realty and Lument Finance go up and down completely randomly.

Pair Corralation between Broadmark Realty and Lument Finance

If you would invest  256.00  in Lument Finance Trust on December 29, 2024 and sell it today you would earn a total of  12.00  from holding Lument Finance Trust or generate 4.69% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Broadmark Realty Capital  vs.  Lument Finance Trust

Broadmark Realty Capital

Risk-Adjusted Performance

Very Weak

Over the last 90 days Broadmark Realty Capital has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent primary indicators, Broadmark Realty is not utilizing all of its potentials. The recent stock price mess, may contribute to short-term losses for the institutional investors.

Lument Finance Trust

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Lument Finance Trust are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable technical and fundamental indicators, Lument Finance is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Broadmark Realty and Lument Finance

The main advantage of trading using opposite Broadmark Realty and Lument Finance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Broadmark 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 Broadmark Realty Capital 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.

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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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.