Correlation Between Grupo Aval and LendingClub
Can any of the company-specific risk be diversified away by investing in both Grupo Aval and LendingClub 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 Grupo Aval and LendingClub into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Grupo Aval Acciones and LendingClub, you can compare the effects of market volatilities on Grupo Aval and LendingClub 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 Grupo Aval with a short position of LendingClub. Check out your portfolio center. Please also check ongoing floating volatility patterns of Grupo Aval and LendingClub.
Diversification Opportunities for Grupo Aval and LendingClub
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Grupo and LendingClub is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Grupo Aval Acciones and LendingClub in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LendingClub and Grupo Aval 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 Grupo Aval Acciones are associated (or correlated) with LendingClub. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LendingClub has no effect on the direction of Grupo Aval i.e., Grupo Aval and LendingClub go up and down completely randomly.
Pair Corralation between Grupo Aval and LendingClub
Assuming the 90 days trading horizon Grupo Aval is expected to generate 1.43 times less return on investment than LendingClub. But when comparing it to its historical volatility, Grupo Aval Acciones is 2.03 times less risky than LendingClub. It trades about 0.3 of its potential returns per unit of risk. LendingClub is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest 1,285 in LendingClub on September 5, 2024 and sell it today you would earn a total of 209.00 from holding LendingClub or generate 16.26% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Grupo Aval Acciones vs. LendingClub
Performance |
| Timeline |
| Grupo Aval Acciones |
| LendingClub |
Grupo Aval and LendingClub Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Grupo Aval and LendingClub
The main advantage of trading using opposite Grupo Aval and LendingClub positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Grupo Aval position performs unexpectedly, LendingClub 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 LendingClub will offset losses from the drop in LendingClub's long position.| Grupo Aval vs. Postal Savings Bank | Grupo Aval vs. CAIXABANK UNADR 13 | Grupo Aval vs. Superior Plus Corp | Grupo Aval vs. NMI Holdings |
| LendingClub vs. Visa Inc | LendingClub vs. Visa Inc | LendingClub vs. American Express | LendingClub vs. ORIX Corporation |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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