Correlation Between P10 and Lument Finance

Can any of the company-specific risk be diversified away by investing in both P10 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 P10 and Lument Finance into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between P10 Inc and Lument Finance Trust, you can compare the effects of market volatilities on P10 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 P10 with a short position of Lument Finance. Check out your portfolio center. Please also check ongoing floating volatility patterns of P10 and Lument Finance.

Diversification Opportunities for P10 and Lument Finance

-0.4

Correlation Coefficient

P10  Lument Finance

Very good diversification

The 3 months correlation between P10 and Lument is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding P10 Inc 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 P10 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 P10 Inc 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 P10 i.e., P10 and Lument Finance go up and down completely randomly.

Pair Corralation between P10 and Lument Finance

Allowing for the 90-day total investment horizon P10 Inc is expected to under-perform the Lument Finance. In addition to that, P10 is 1.44 times more volatile than Lument Finance Trust. It trades about -0.03 of its total potential returns per unit of risk. Lument Finance Trust is currently generating about 0.11 per unit of volatility. If you would invest  257.00  in Lument Finance Trust on December 26, 2024 and sell it today you would earn a total of  24.00  from holding Lument Finance Trust or generate 9.34% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

P10 Inc  vs.  Lument Finance Trust

P10 Inc

Risk-Adjusted Performance

Very Weak

Over the last 90 days P10 Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, P10 is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Lument Finance Trust

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Lument Finance Trust are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak technical and fundamental indicators, Lument Finance may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with P10 and Lument Finance

The main advantage of trading using opposite P10 and Lument Finance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if P10 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 P10 Inc 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.

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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.