Correlation Between Lument Finance and Elme Communities

Can any of the company-specific risk be diversified away by investing in both Lument Finance and Elme Communities 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 Elme Communities 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 Elme Communities, you can compare the effects of market volatilities on Lument Finance and Elme Communities 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 Elme Communities. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lument Finance and Elme Communities.

Diversification Opportunities for Lument Finance and Elme Communities

-0.19

Correlation Coefficient

Lument Finance  Elme Communities

Good diversification

The 3 months correlation between Lument and Elme is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding Lument Finance Trust and Elme Communities in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Elme Communities 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 Elme Communities. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Elme Communities has no effect on the direction of Lument Finance i.e., Lument Finance and Elme Communities go up and down completely randomly.

Pair Corralation between Lument Finance and Elme Communities

Considering the 90-day investment horizon Lument Finance Trust is expected to under-perform the Elme Communities. In addition to that, Lument Finance is 2.2 times more volatile than Elme Communities. It trades about -0.11 of its total potential returns per unit of risk. Elme Communities is currently generating about -0.05 per unit of volatility. If you would invest  1,569  in Elme Communities on May 6, 2025 and sell it today you would lose (58.00) from holding Elme Communities or give up 3.7% of portfolio value over 90 days.

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

Lument Finance Trust  vs.  Elme Communities

Lument Finance Trust

Risk-Adjusted Performance

Very Weak

Over the last 90 days Lument Finance Trust has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's technical and fundamental indicators remain comparatively stable which may send shares a bit higher in September 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Elme Communities

Risk-Adjusted Performance

Very Weak

Over the last 90 days Elme Communities has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound primary indicators, Elme Communities is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Lument Finance and Elme Communities

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

The idea behind Lument Finance Trust and Elme Communities 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.