Correlation Between Seven Hills and Lument Finance

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

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

Diversification Opportunities for Seven Hills and Lument Finance

0.13

Correlation Coefficient

Seven Hills  Lument Finance

Average diversification

The 3 months correlation between Seven and Lument is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding Seven Hills Realty 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 Seven Hills 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 Seven Hills Realty 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 Seven Hills i.e., Seven Hills and Lument Finance go up and down completely randomly.

Pair Corralation between Seven Hills and Lument Finance

Given the investment horizon of 90 days Seven Hills Realty is expected to generate 0.87 times more return on investment than Lument Finance. However, Seven Hills Realty is 1.15 times less risky than Lument Finance. It trades about -0.07 of its potential returns per unit of risk. Lument Finance Trust is currently generating about -0.1 per unit of risk. If you would invest  1,136  in Seven Hills Realty on May 6, 2025 and sell it today you would lose (110.00) from holding Seven Hills Realty or give up 9.68% of portfolio value over 90 days.

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

Seven Hills Realty  vs.  Lument Finance Trust

Seven Hills Realty

Risk-Adjusted Performance

Very Weak

Over the last 90 days Seven Hills Realty has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest inconsistent performance, the Stock's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

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.

Pair Trading with Seven Hills and Lument Finance

The main advantage of trading using opposite Seven Hills and Lument Finance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Seven Hills 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 Seven Hills Realty 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.