Correlation Between LendingClub and Visa
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By analyzing existing cross correlation between LendingClub and Visa Inc, you can compare the effects of market volatilities on LendingClub and Visa 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 LendingClub with a short position of Visa. Check out your portfolio center. Please also check ongoing floating volatility patterns of LendingClub and Visa.
Diversification Opportunities for LendingClub and Visa
0.92 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between LendingClub and Visa is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding LendingClub and Visa Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Visa Inc and LendingClub 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 LendingClub are associated (or correlated) with Visa. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Visa Inc has no effect on the direction of LendingClub i.e., LendingClub and Visa go up and down completely randomly.
Pair Corralation between LendingClub and Visa
Assuming the 90 days trading horizon LendingClub is expected to generate 2.29 times more return on investment than Visa. However, LendingClub is 2.29 times more volatile than Visa Inc. It trades about 0.21 of its potential returns per unit of risk. Visa Inc is currently generating about 0.3 per unit of risk. 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 | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
LendingClub vs. Visa Inc
Performance |
| Timeline |
| LendingClub |
| Visa Inc |
LendingClub and Visa Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LendingClub and Visa
The main advantage of trading using opposite LendingClub and Visa positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LendingClub position performs unexpectedly, Visa 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 Visa will offset losses from the drop in Visa's long position.| 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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