Correlation Between Ladder Capital and Claros Mortgage

Can any of the company-specific risk be diversified away by investing in both Ladder Capital and Claros Mortgage 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 Ladder Capital and Claros Mortgage into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Ladder Capital Corp and Claros Mortgage Trust, you can compare the effects of market volatilities on Ladder Capital and Claros Mortgage 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 Ladder Capital with a short position of Claros Mortgage. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ladder Capital and Claros Mortgage.

Diversification Opportunities for Ladder Capital and Claros Mortgage

0.76

Correlation Coefficient

Ladder Capital  Claros Mortgage

Poor diversification

The 3 months correlation between Ladder and Claros is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Ladder Capital Corp and Claros Mortgage Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Claros Mortgage Trust and Ladder Capital 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 Ladder Capital Corp are associated (or correlated) with Claros Mortgage. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Claros Mortgage Trust has no effect on the direction of Ladder Capital i.e., Ladder Capital and Claros Mortgage go up and down completely randomly.

Pair Corralation between Ladder Capital and Claros Mortgage

Given the investment horizon of 90 days Ladder Capital Corp is expected to generate 0.36 times more return on investment than Claros Mortgage. However, Ladder Capital Corp is 2.8 times less risky than Claros Mortgage. It trades about -0.02 of its potential returns per unit of risk. Claros Mortgage Trust is currently generating about -0.05 per unit of risk. If you would invest  1,207  in Ladder Capital Corp on September 3, 2024 and sell it today you would lose (21.00) from holding Ladder Capital Corp or give up 1.74% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Ladder Capital Corp  vs.  Claros Mortgage Trust

Ladder Capital Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ladder Capital Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable fundamental indicators, Ladder Capital is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Claros Mortgage Trust

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Claros Mortgage Trust has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with Ladder Capital and Claros Mortgage

The main advantage of trading using opposite Ladder Capital and Claros Mortgage positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ladder Capital position performs unexpectedly, Claros Mortgage 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 Claros Mortgage will offset losses from the drop in Claros Mortgage's long position.

The idea behind Ladder Capital Corp and Claros Mortgage 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.

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 Commodity Directory module to find actively traded commodities issued by global exchanges.